No movement for sterling ahead of mid-week data
21 October, 2014
This week’s trading got off to a particularly slow start yesterday with an absence of any key economic data to report on. German producer price index came in exactly as expected at -1% but this had little if any impact on exchange rates. Sterling exchange rates made very small gains as they complete the recovery from last week’s losses. Rates have now peaked at technical resistance levels and are extremely unlikely to improve further until traders know the outcome of Wednesday’s Band of England minutes and Thursday’s Retails Sales figures.
What does this mean for buyers? Sterling exchange rates are currently dropping off as the market adjust expectations on interest rate changes which were initially forecasts for sooner than later. Recent poor inflation data has now pushed this back into Spring/Summer next year which is likely to keep pressure on the pound for a prolonged period. Our immediate risks are the minutes released tomorrow as previously 2 members of the MPC have voted for a rate hike, and there now stands a genuine chance that one or both of these members may have changed their stance due to recent figures. If this is the case we would expect the pound to take some considerable losses so anyone who is able to do so may wish remove this risk by fixing your rate for sending money abroad today.
Today provides another very quiet day on the calendar with just UK Public Sector Net Borrowing figures to be announced at 9:30am and this data has been poor in recent months. This afternoon at 3pm US Existing Home Sales will be released.
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