The main news today will be the UK Bank of England (BoE) minutes, details of which are outlined below. This often has a big impact on the currency markets, as it gives an insight into future UK interest rate movements, and therfore effects the value of the pound and can cause big movements in exchange rates.
UK Manufacturing
The government is being urged to give the same financial support to manufacturing during the recession as it has to failing UK banks. The Work Foundation think tank wants emergency state funding to help save jobs and companies.
It says the sector is "extremely important for jobs, exports and GDP", and will offer one of the best chances for growth in an upturn. The government has pumped billions of pounds into failing UK banks. If they do indeed do the same for manufacturing, then this is likely to be viewed as negative for the beleagured UK economy, and thus the pound.
The economy is in a very fragile state at the moment, and further bad news for the economy could cause further Sterling weakness.
US Dollar
US President Barack Obama has signed his hard-fought economic stimulus plan in Denver, after Congress approved the $787bn (£548bn) package last week. Speaking at a signing ceremony he said it was "the most sweeping recovery package in our history".
The plan is aimed at saving or creating 3.5 million jobs and boosting consumer spending and rebuilding infrastructure. If the plan does work, then it could strengthen the US Dollar. A stronger dollar will be more expensive to purchase, meaning the net effect could well be lower exchange rates.
For this reason, if you have a requirement to purchase US Dollars, and need more information on which way the GBPUSD Exchange rate may go, please Click Here to Send me an Email
Todays Data
UK 09:30 Bank of England Minutes.
The minutes of the Bank of England MPC meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee.
US
Various data from the US this afternoon. We have the Import Price Index. This informs the changes in the price of imported products into the US.The higher the cost of imported goods, the stronger the effect they will have on inflation, redunding in a higher probability of a rate rise.
Therefore, a high reading should be taken as positive for the US dollar, and thus lower exchnage rates if you are buying with Sterling.
We also have US Housing data; Building permits and housing starts, so expect some volatility for GBPUSD (cable) today.
Forward Contracts
If you are worried about exchange rate fluctuations, then get in touch today to discuss Forward Contracts. This is where you can fix todays exchange rates for a future date, but only pay a small deposit of the total required.
This gives you certainty of what your currency will cost, removing the risk of rates going down and allowing you to budget more effectively.
The only data of note from the EU today is construction output. The main data other than the BoE minutes is all US based.
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Labels: EUR, Exchange Rate Forecast, GBP, Sterling Outlook, USD