Pound picks up against USD EUR

7 November, 2013

Graham Harborne

So far we have a bit of a mixed week in the currency markets and there might well be some concern for those Sterling bulls amongst you. A raft of positive UK data releases have seen the Pound pick up against both the euro and dollar this week but possibly more significantly it has failed to push higher and indeed retraced each time it has strengthened. Manufacturing, Industrial Production and retail sales have all been positive and with much of the European and American data being poor we would have possibly expected larger gains than we have seen. A possible reason for this is that the BoE seem to have made their position on a future rate rise fairly clear – if we don’t see a dramatic fall in the unemployment rate interest rates will remain low. I suspect that unless we continue to see positive data releases the pound could slowly slip away. Having said that Mark Carney and his MPC colleagues could spring a surprise on us but don’t expect to see that anytime soon! That leads us into today where the focus will be on the BoE and ECB when rate decisions are announced around lunchtime. As I said don’t expect to see any changes by the BoE but don’t be surprised if the ECB throw a spanner into the mix. There has been talk amongst many that a rate cut could well come as soon as today. This has partly been priced in but we could see significant weakness of the euro should it actually happen. On the other hand we could see euro strength if they remain unchanged and we will then be guided by the words of Draghi in his press conference who will give reasons behind today’s decision and also an insight to future decisions. Could well be fun and games today could also be about as interesting as watching paint dry so if you would rather secure your currency before the potential fireworks, which could well be a non event, then please get in touch with us here at Currency Index.