UK downgrade dominates busy week

15 May, 2015

Matthew Boyle

It has been a busy week on the currency market but the main news that has seemed to dominate has been Wednesdays announcement from Bank of England chief Mark Carney who downgraded the UKs economic outlook. With an inflation figure at zero (for a second month in a row) down from a predicted rate 2, Carney warned we could see a period of deflation in the UK. This saw the pound after making gains weaken quickly amidst concerns that any interest rate increase will not take place now until likely early next year at soonest.

However elsewhere is has been a fairly good week for the pound with industrial manufacturing figures the best they have been in 6 months and showing a reduction in unemployment figures. Against the Euro following last weeks election we have seen GBP>EUR rates return to their previous levels, whilst against the currently flagging USD it has continued to make gains. Indeed yesterdays main data releases came from the US and whilst there was a reduction in US jobless claims producer price index data came in under across the board further weakening the greenback which lost near a cent against the pound and is seeming to lose ground on a daily basis now against the single currency.

Today we have a fairly quiet day in terms of data with US industrial production and the Reuters Consumer Index from the U.S, whilst from the UK we have the CB economic index. Europe releases no data today. So with little to go on it is likely we will see sentiment continue to drive rates as the 3 majors – GBP, USD and EUR continue to fight for top-spot.

Whilst following last weeks vote and the subsequent announcement of a Tory led government has seen the pound gain ground, certainly Wednesdays downgrade by Carney and its implications on UK interest rates could have an effect. The UK is not the only one currently wobbling – whilst Greece have made their recent debt repayment to the IMF they have warned they have ransacked country funds and are weeks away from being broke. And the previously storming USD has seen a period of weakness following the recent FED announcement in a delay to their own interest rate hike. Certainly at present there is significant tussle between the majors and the coming few weeks will no doubt see significant movements in rates.

With so much going on, should you have an upcoming transfer requirement speak to your Currency Index broker today for some friendly guidance on how to avoid any potential pitfalls and to ensure you get the most out of your Currency transfer.