A Quiet Week Ahead for Currency Markets

Last week saw sterling ride a rollercoaster in value as markets priced in their expectations for interest rate rises and then priced those back out again following the Bank of England meeting.

On Wednesday we saw the pound rise to some of its highest levels against the euro as markets priced in their expectations over how many MPC members would be voting for an interest rate hike, which in the past few months has been no members at all. However, more recently Mark Carney and other members have been openly highlighting the fact that the Bank is still considering interest rate rises here and that we should be expecting these next year, with some more bullish analysts putting their bets on late this year. With this in mind we were expecting at least two, possibly three members to have voted for a rate hike when the MPC meeting results were released on Thursday. As we saw this was not the case as only one member voted for a hike, leading the way for markets to sell sterling and the rates to tumble.

So this week the pound starts off lower across the board compared to its major pairings and plenty of data out for investors to take into consideration elsewhere other than the UK. Wednesday is the only day to note for the UK as the rest of the week gives nothing to help or hinder the pound. For anyone looking to exchange pounds over the week could find it prudent to look at their transfer sooner rather than later, just in case the lack of data pushes investors out of sterling, meaning lower exchange rates and less return on your exchange.

The highlights of the week are as follows:

• Tuesday – German ZEW economic sentiment survey
• Wednesday – UK unemployment and claimant count, EU industrial production
• Thursday – ECB monetary policy accounts meeting, US retail sales, NZ retail sales
• Friday – EU GDP and inflation figures