Markets stagnant amidst little data

23 August, 2016

Matthew Boyle

Yesterday was a stagnant day in the market – unsurprising give that there was no data of any note released. As such rates simply bobbed up and down within a tight range there were no real movements to report.

In the news however we have seen reports that the Brexit effect has been underestimated with several of the major banks warning of parity in GBP >EUR rates will happen next year. Add to this reports from Countrywide (one of the UKs largest estate agents) suggest falling growth in housing and house prices as a result of the hike in stamp duty earlier this year, combined with the fear of uncertainty following the Brexit vote.

Interestingly and in scenes suited to a James Bond movie, we also saw E.U future talks attended by the German, French and Italian leaders who met on an aircraft carrier off the coast of Naples to discuss the future of the European Union following Brexit.

Whilst many of the E.U members have called for a quick exit PM Teresa May has stated that she would not be invoking article 50 this year. And so it is likely much of the current uncertainty will continue so be prepared for further GBP losses in the coming months.

Today is much busier in the way of data, and as such we are much more likely to see movements in the rates. In the early hours of this morning we have already seen the Bank of Japans Governor Kuroda give a speech, where he did not rule out deepening negative rates and so left the door open for a drop next month. This morning we see a raft of data from the Eurozone including Markit services and PMI, whilst in the afternoon the focus shifts to the US who also release the same data with the addition of New home sales and the Redbook index.

With little data out from the UK these will certainly be ones to watch as the market will look for signs of potential further monetary easing from the ECB, whilst the FED seem upbeat currently as they are close to hitting their own targets for an interest rate hike.

And whilst these reports are not directly linked to employment and inflation levels (which are most closely associated with what would determine a rate change) any clues here will be watched for closely for any hints for movements in the rate over the coming months.

Should you have any upcoming requirements, and sadly with further losses seemingly inevitable in the coming months for the Pound, speak to your Currency Index today for some friendly and professional guidance on how to avoid getting caught out by any costly drops in the rate.

Please remember that Currency Index offers forward contracts which allow to secure and protect your rate – so give us a call today and ask your Broker about these if they are something you have not already considered.