Losses for the Pound ahead of ECB meeting and Interest rate decision next week

Yesterday was a bad day after losses for the Pound across the board and noticeably against the two major currencies USD & EUR. Throughout the day the Pound slowly lost ground against both the single currency and the Greenback as traders looked to safeguard positions ahead of the ECB meeting tomorrow, and the Bank of England Interest rate decision next week.

As is common, in a day with little data from the UK, the Pound could offer no defence as morning Eurozone PMI data came in strong, and by the end of the day, it had lost around a cent against the Euro.  Similarly, the Pound began the day losing ground against the Dollar which was not helped by afternoon data from the States which also showed an improvement in their own PMI figures. By the end of the day’s trading, it had also lost around a cent against the Dollar.

Thursdays ECB meeting will give clues as to their potential unwinding of the ongoing Q.E programme, whilst also giving clues to any changes to their own interest rate – something that has been discussed for many months now.

So, stay in close contact if you have any GBP/EUR requirements in the short-term, particularly as this may play a part in setting the tone ahead of the pivotal Bank of England meeting on the 2nd November. And with the US positioning for a potential rate hike of their own suggested for December, USD pairings are also expected to remain volatile in the short-term.

Today’s Currency Data releases

Today is a day where data releases are largely dominated by reports from elsewhere in the world. This morning in the early hours we have already seen Australian inflation data coming out poorer than was expected out at 1.8% down from a predicted 2.0%. As a result, the Aussie Dollar has started to tumble, already losing a cent against the Pound this morning.

Later today at 3 pm we also have The Bank of Canada Monetary policy report, Interest rate decision and statement so Loonie traders might like to stay in close touch.

In terms of data which could affect the major Pound pairings, we have German Business climate data kicking off the day at 9.00AM, closely followed by UK GDP at 09.30, with US house prices and durable goods orders in the early afternoon. Whilst these data releases are not deemed to be of major note they can and could move the market, especially UK GDP which could impact upon next week’s BoE decision.

As is apparent in the last week, much of the market is hanging upon next week’s result from the Bank of England meeting, whether we will see a hike and if not now then when? Readers might like to consider taking the risk out as opposed to waiting on the result, as we could see a significant movement in rates.

Some have suggested we might see as much as a 2% swing dependent upon the result, which on a purchase of 100k could increase your cost by 2k pounds. If you aren’t keen on taking such a risk, speak to your Currency Index Broker today who can provide you with some friendly guidance on how you can protect your purchase.

Despite the concern over the uncertainty ahead, Currency Index can help you try and avoid what could be a costly mistake should things go the wrong way.