A look ahead to the currency market this week

Last week’s trading saw a mixed bag for the pound with very little movement to note over the course of the week. Sterling traded within a 1 cent high and low all week against the Euro and finished the week where it started against the US Dollar having experience higher and lower rates in between. Many sterling exchange rates now find themselves in a pivotal position so the start to this week will be crucial for the weeks ahead. GBP/EUR is struggling to push higher having failed to break through a key resistance level for 4 consecutive days which puts these rates at risk off again to lower levels seen within the last couple of weeks.

Friday’s GDP figures for the UK did initially support the pound which was likely a relief that growth of the UK economy had not slowed down more than originally suspected with actual figures meeting forecasts exactly. The UK economy grew by 0.7% in the 3 months to September, down from 0.9% the previous quarter and bringing the annual figure down from 3.2% to 3%. These figures are unlikely to affect current sentiment which is very much in the balance at the moment. The global economic slowdown seems to be taking its toll on the UK with growth slowing and inflation dropping but the UK remains the pick of a bad bunch from a currency perspective so whilst the pressure is on the pound at the moment we are still seeing some stability and volatility in exchange rates providing opportunities for both sellers and buyers within a small range.

The week ahead largely focuses on the US Dollar with regards to data which is likely to see a pivotal change in GBP/USD exchange rates as the week develops so keep in touch with your account manager should you have an imminent requirement. The main releases to watch out for this week are as follows:

Monday

• 1:45pm (USD) – Services PMI

Tuesday

• 12:30pm (USD) – Durable Goods Orders
• 2:00pm (USD) – Consumer Confidence

Wednesday

• 9:30am (GBP) – Net Lending to Individuals
• 6:00pm (USD) – FED Interest Rate Decision
• 9:00pm (NZD) – RBNZ Interest Rate decision

Thursday

• 12:30pm (USD) – Gross Domestic Product
• 1:00pm (EUR) – Germany Consumer Price Index

Friday

• 10:00am (EUR) – Consumer Price index / Unemployment