2016 downward trends may continue

1 February, 2016

Grace Rae

The last week of January saw sterling makes some small gains against the Euro and the US Dollar following its weak start to the year due to the central banks of the UK and Europe contradictory announcements on their anticipated interest rate policies. Although the pound saw a 3 cent recovery last week compared to earlier in the month, it should be warned that the downward trend may continue. The release of positive Euro Inflation data on Friday coming out at 1.0% has strengthened the Euro, sending the pound back down.

The looming ‘Brexit’ referendum also adds to the continued uncertainty of sterling investor confidence as the markets sentiment is that the GBP EUR exchange rates could drop back into the 1.20’s sooner rather than later. US GDP data was also released on Friday afternoon posting results or 0.8% as expected, however the annualized figure came in at 0.7% rather than the expected 0.8% showing that US economy has slowed in the final months of 2015. This data caused the minor spike in the rate move swiftly back down to levels below 1.43. EUR > USD also suffered and lost half a cent following the data release.

As we enter February, the month as always starts off with tons of data that could cause some movements in the rates. If you have an upcoming requirement due, get in touch with your Currency Index account manager and get your transfer booked in. With plenty to influence your transfer over the next week and given the markets current conditions in this downward trend, is it worth risking the wait? If your uncertain then speak to one of the Currency Index team today for some friendly guidance. 

The Week Ahead 

Markit Manufacturing PMI for EUR at 9am, GBP at 9:30am & USD at 2:45pm.
GBP – December’s Consumer Credit and Mortgage Approvals at 9:30
USD – Personal Consumption, Income and Expenditure at 1:30pm
CAD – RBC Manufacturing PMI at 2:30pm
USD – ISM Manufacturing PMI at 3pm

AUD – RBA Interest Rate Decision at 3:30am
GBP – PMI Construction at 9:30am
EUR – Unemployment Rate at 10am
NZD – Unemployment Rate at 9:45pm

JPY – Bank of Japan Governor Kuroda Speech at 2:30am
EUR – Non-Monetary Policy ECB Meeting at 8am
EUR – Markit Services PMI at 8:15am and 9am
GBP – Markit Services PMI at 9:30am
EUR – Economic Growth Forecast at 10am
USD – Market Services PMI at 2:45pm

GBP – BoE Interest Rate Decision and Monetary Policy at 12pm
GBP – BoE Monetary Policy Committee Vote (Unchanged, Cut, Hike) at 12pm
GBP – BoE Governor Mark Carney Speech at 12:45pm
USD – Initial Jobless Claims at 1:30pm

AUD – RBA Monetary Policy Statement at 12:30am