Pound gains further as the US increase rates

22 March, 2018

Nakhil Mahra

On the back of its recent run, yesterday the Pound gained a further 1/2 cent on the back off positive average earning figures, coming in 0.2% higher than predicted at 2.8%. This with lower inflation figures, showing the economy is headed in the right direction, as predicted by Mark Carney not long ago where he expected inflation to come back down. The pound hitting new highs against the Euro for over 7 weeks and providing a buying a opportunity for those of you who have been holding off. These current highs also providing a opportunity for those off you wanting to secure the rate for future use with our forward contract option. Against cable we have seen a new high too with key benchmarks being broken and a hint of a upwards trend line. However all these gains could be lost quickly if the northern Irish border issue is not resolved quickly and is still a major obstacle in Brexit talks.

The day’s biggest loser was the USD, with the FOMC meeting yesterday evening at 7 there was a lot expected in terms of interest rate hikes, with the will they won’t they situation still hanging over. Powell did not provide anything hawkish in the long term, this despite the recent economic outlook being positive with unemployment staying low and growth in other sectors picking up. This was enough for the US to increase their base rate to 1.75 from the previous 1.50 mark. However the heavy fall for USD came when the long term outlook was more conservative and some volatility in the US predicted in 2019 and 2020.

Today is another busy day in the markets, with retails sales out at 9.30, any urgent requirement in the morning then stay in touch with your account manager. Then at midday BoE meet again with Carney speaking at 12.30. Historically this has been very volatile and for sure to cause market movements.