Friday Currency Market News

16 October, 2015

Tom Arnold

As the week draws to a close we find ourselves in quite positive territory for the Pound, with a couple of days worth of gains under its belt, it is definitely back in favour on the currency markets. Initially this was triggered by some very slightly better than expected unemployment data on Wednesday, but rather than the actual numbers being the real driver it seemed that the very fact that a piece of UK data hadn’t fallen flat on its face, was the real surprise and as such the Pound has made some quite significant gains across the board, but most notably against both the Euro and the Dollar.

As today dawns we find that the Pound has made more headway thanks to some particularly downbeat comments from ECB member Nowotny yesterday, who suggested that European QE will need to be extended. Obviously this is bad news for the Euro – Quantitative Easing is the mechanism central banks use to inject liquidity into the market, and if you increase the number of Euros in the market you obviously dilute the Euro’s strength. As a result Sterling is currently trading almost two cents higher against the Euro than just three days ago.

On the US front, the Dollar is still reeling from the recent terrible employment numbers and the realisation that the Fed is not going to raise interest rates before Spring 2016. The Dollar had been firmly in the driving seat for some months thanks to expectations that the Fed would raise either last month or this month, but this is now completely off the cards until next year, and as a result the Dollar is now three cents cheaper against the Pound.

All of this is great news if you have Pounds in hand and an upcoming currency purchase, but it is worth noting that almost all of the recent UK economic data has failed to impress, and even the “positive” unemployment numbers were very average, so the Pound’s good form is very weakly supported – the slightest knock could send it tumbling away, so make sure you stay in close contact with your CI account manager to be kept informed of exactly what you can currently achieve and what you options are to make the most of this great buying opportunity.