Last round of key currency announcements for 2017
15 December, 2017
Thursday’s trading was packed full of key currency announcements, that would all but round up the main market moving events for the rest of the year, particularly for Sterling.
UK Retail Sales
After more disappointing figures in October, the markets were optimistic of a return to slightly better figures in November with the boost of early Xmas shopping and Black Friday in particular. Expectations were for a monthly growth of 0.4%, dragging the annual growth up to 0.3% from -0.3% previously. Actual results surprised to the upside with a monthly growth figure of 1.1% and annual of 1.6%, however there was no positive reaction for Sterling whatsoever, with most exchange rates dropping in the couple hours that followed.
Bank of England Rate Decision
Markets were likely subdued in the morning as traders were awaiting the main currency announcements of the day from the bank of England. This too however ended up as bit of a non-event with market reaction very muted. The MPC delivered an expected vote of 9-0 against a rate hike, having already increased rates by 0.25% last month. Further rate hikes in the Uk are not expected until at least the end of 2018. The minutes did however highlight 2 significant developments since the last meeting, namely the Autumn Budget and the progress in Brexit talks. The BoE commented that Brexit progress would ‘reduce the likelihood of a disorderly exit and was likely to support household and corporate confidence’. They also commented that the easing of austerity measures in the latest budget could see UK GDP as much as 0.3% higher by 2020.
ECB Meeting and Rate Decision
Shortly after the BoE announcement followed the same meeting for the Euro-zone, where once again all policies were kept on hold as expected leaving little surprise for the markets. It was therefore left for traders to dissect the language in the accompanying speech from Mario Draghi where there were some adjustments. The tone was much more positive with Draghi saying ‘we are certainly more confident today than we were 2 months ago’ and subsequently upgraded growth forecasts for the Euro-zone from 2.2% to 2.4% this year. Growth forecasts for 2018 were also upgraded from 1.8% to 2.3%, a much better outlook that we currently have in the UK leaving the pound vulnerable against the Euro in the medium term.
Today, and indeed the rest of the year is now absent of any key data releases so anyone still holding on for any significant changes in rates may wish to reconsider the current levels. Trading typically dies down and becomes very thin over the Xmas period meaning even more sideways trading is very likely. Thankfully buying rates for Euros and US Dollars are close to the best we have seen for a number of months, and can be guaranteed for up to 2 years ahead with just a 10% deposit.
Currency Announcements Next Week
Monday sees Eurozone inflation figures released, before the currency news calendar quietens down towards the Christmas break.
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- EU’s general affairs council agreeing a trade negotiation mandate 26 February, 2020
- Barnier still trying to throw a spanner in the works 24 February, 2020
- Important data releases dictate Sterlings movements 21 February, 2020
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