Pound continues to surprise markets

After a quiet beginning to the week the Pound continues to surprise the markets as we saw some positive data yesterday morning in the form of Augusts Retail Sales. The results came in strongly above expectations, up 0.4% month on month and up 1% Year on Year. The positive release has cause some speculation amongst investors that the Bank of England could raise rates in the coming months causing the Pound to spike and gain back some of its losses from earlier in the week. Although we saw a spike it didn’t reach the levels it had hit the week previous, just over half a cent against the Euro and just under a cent against the Dollar providing good levels to take advantage of for those with sterling in hand.

German Election

This weekend German voters take to the polls on the 24^th to vote and decide if they will give Chancellor Angela Merkel a fourth term. Although the election isn’t just about who will take the chancellorship, it is about is which grouping of parties is able to form the next government once the final results are counted. No party has won an complete majority since 1957,  and Germany has a long tradition of coalition governments, which means that the parties involved must work together and agree on a policy platform. The markets so far have not made much comment of how the results could affect the rates but is should be an event to be wary of.

US Federal Reserve holds interest rates

Yesterday evening the US Federal Reserve released their latest interest rate decision, where they left rates on hold, although they did comment that they could still expect one rate hike later this year, and three more times in 2018.  The FED also mentioned that in October they may begin to unwind on some of the stimulus it began almost a decade ago since the recession. The news had caused the Dollar to spike briefly but corrected back overnight and opened today’s trading day slightly lower than where is closed off yesterday.

The day ahead

Today kicks off with UK Public Sector Net Borrowing data at 9:30 and then at 10:00am European Central Bank committee member Peter Praet is due to speak. The U.S is due to release Continuing/Initial Jobless Claims and Philadelphia Fed Manufacturing Survey at 13:30pm followed by Housing Price Index at 14:00pm then at 14:30pm the market’s attention turns to the ECB President Mario Draghi where he is due to speak. Renowned for being good at talking up the position of the Euro we could see some movements in the rates in the afternoons trading following his comments.

As ever, if you have an currency exchange due in the coming weeks/months then do get in touch with one of the team here at Currency Index to discuss the various options we can provide to help you secure your currency. Will today see the Pound continue up or return to its recent falling trend?