Final stand for the pound

20 April, 2015

Matthew Boyle

In recent weeks we have seen the US Dollar (USD) go from strength to strength ahead of the much talked about interest rate hike, with the Federal committee split between a potential raise this summer whilst others suggest next year. As a result rates for buying USD from other currencies and particularly against Sterling (GBP) have been tumbling. Similarly for GBP against the Euro (EUR) and with the upcoming UK election and the uncertainty surrounding it many analysts are suggesting GBP will weaken heavily as we get closer to the election and to expect rates to drop. Last week however was a fairly strange week on the market as we saw a reversal of suggested and recent trends with GBP gaining ground against both EUR and USD. Some poor data from US including a lower than expected retail sales figure saw USD weaken slightly and allowed a number of currencies to claw back some lost ground. A continuing weak Euro added with fears over the next Greek repayment due 12th May allowed the pound to gain against both the single currency and also the greenback throughout the week, but with Fridays announcement that unemployment in the UK (despite dropping) was not reducing as much as predicted this somewhat halted the pounds advances and by the end of trading it had lost ground.

Take note

Those of you with upcoming currency purchases, particularly those with a requirement to buy Euros or US dollars from Sterling. With the UK election looming and all analysts pointing to a drop in rates this could well be the last window of opportunity to secure rates at these currently high levels. Certainly as we get closer to the 7th May we will see increased volatility and post-election there will be a period where the dust will need to settle regardless of result so we could well see GBP buying rates plummet over the next few weeks. Should you have any concerns or wish to look at options to secure and protect your rate, speak to you Currency Index broker today who can provide you with some friendly and professional guidance on how to do so.

This week’s major data releases

14.05 CAD BOC Governor Poloz Speech
06.00 EUR German Producer Price Index
16.30 AUD RBA Governor Glenn Stevens speech

01.30 AUD RBA meetings minutes
09.00 EUR German ZEW economic survey

01.30 AUD RBA inflation data
08.30 GBP BoE MPC vote
13.00 USD Housing Price Index

08.00 EUR Markit manufacturing PMI
08.30 GBP Retail Sales
12.30 USD Jobless claims
13.45 USD Markit manufacturing PMI
14.00 USD New home sales

24Hr EUR Eurogroup meeting
08.00 EUR EUR German IFO data
12.30 USD Durable goods orders