Sterling fight back comes to an end

19 September, 2016

Ashley Finill

Last week saw Sterling’s fight back from the start of the month come to an end and on the back foot once again commencing it’s journey on the expected downward trend. The start of September saw Sterling start to make a recovery from its losses since the announcement of Brexit but negative inflation coming out of the UK countered the comeback and the Pound was once again floored. To eradicate hope of a revival the US dealt a knockout blow of their own and put the frail Pound on the ropes again late on Friday just before the weekend bell went with positive inflation figures which will give the FED further impetus to act on recent talk of a future rate hike. So with the The Bank of England governor Mark Carney hinting at a rate cut in November and the FED being supplied reasons to increase the interest rate in the US this brings more doom and gloom for Sterling over the next few months and in a very vulnerable position.

This week will be an important one for the Pound as the FED release information on their interest rate although not expected to rise this month Janet Yellen could very well hint toward and interest rate hike with the positive inflation results from Friday. Should this be the case then expect Sterling to react and could take a further hammering. The option of a forward contract is a great way to secure your currency requirement before bad exchange rate turn ugly. All you need is 10% of the Sterling amount to secure a contract for up to 2 years in advance, get in touch with your account manager here at Currency Index to discuss your options in these uncertain times.

The week ahead

10am – Construction output – Eurozone
14.00 – NAHB housing market index – US

02.30am – RBA meeting’s minutes – AUD
07.00am – Producer Price Index – Germany
13.00pm – Building permits and housing starts – US
N/A – GDT Price index – NZD

01.30am – Mid-year economic and fiscal outlook
09.30am – Public sector net borrowing – UK
14.00pm – SNB quarterly bulletin – Switzerland
19.00pm – FED interest rate decision – US
22.00pm – RBNZ interest rate decision – NZD

09.00am – Economic bulletin – Eurozone
13.30pm – Jobless claims – US
14.00pm – Housing price index – US
14.00pm – ECB Presiendt Mario Draghi speaks – Eurozone

01.00am – RBA governor Philip Lowe speech
09.00am – Markit services PMI – Eurozone
13.30pm – Retail sales – CAD
13.30pm – Consumer price index – CAD
14.45pm – Markit manufacturing pmi – US