Monday, 25 November 2013

Pound/Euro rates and the weeks economic data

Monday 25th November 2013
It's been a quiet start to the week in the currency markets. The only data of note today was the latest UK Mortgage Approval numbers. These were slightly lower than expected, and so Sterling has fallen a little against the Euro and US Dollar.

Why haven't rates broken the €1.20 mark?

As I predicted in my last post, Pound/Euro rates have again failed to break through the €1.20 level. As has been the case of late, it flirts around that level, before dropping back away. This is because at that level, it triggers lots of orders to buy. In turn this demand to buy Euros gives the single currency strength, and ultimately causes the rate to drop back away.

Moving forwards, I expect this to continue to be the case, dependant on how UK and EU economic data fares (see below). Should we get some further unexpected good news for the UK, we could see the €1.20 level breached. If we do, I'd expect it to keep pushing above this level. There is the risk however that if this were to happen, the Bank of England could move to weaken the Pound and bring rates lower. It's not in the UK's interest for exchange rates to be too high, so this is a risk you need to consider if you need to buy Euros. 


Pound/Euro remains very close to €1.20, and Pound/Dollar is between $1.61 and $1.62 - these levels are close to an all year high, so certainly worth discussing your requirements with me if you need to achieve the best exchange rates. 

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This weeks economic data releases.

As regular readers will be aware, economic data releases are the main cause of exchange rate movements. 

Below I list this weeks releases that I think will have an effect on exchange rates this week. To discuss how this could affect you in more detail, contact me here.

Monday – Today has been relatively quiet, with UK mortgage approvals the only data of note. The numbers were slightly worse than forecast, pulling Sterling a little lower against other currencies. 

Tuesday – Again not very busy in terms of things that could affect GBP/EUR rates. The only UK data of interest is an Inflation report at 10am. All the other data today is from the United States: Building and Housing data, Consumer Confidence numbers, and some manufacturing data, all of which could affect GBP/USD exchange rates. 

Wednesday – In my opinion today is the one most likely to cause some volatility with exchange rates, as we have an important release from Britain in the latest GDP estimate. This will show the estimate for growth, which is expected to be 0.8%. Any lower than this and the Pound may fall, and vice versa. We also have lots of US data today: Unemployment, Consumer Sentiment, and inflation data. So expect today to cause a few changes in exchange rates. 

Thursday – Today could again be important for exchange rates, as we have a report on Financial Stability from the Bank of England, and also a speech from the BoE Governor Mark Carny. In recent times when he has spoken, the Pound has gained in value so it will be interesting to see if that’s the case again. 

In Europe, we have Import Prices and Unemployment data from Germany. As Germany is the EU’s largest economy, the numbers could affect Pound/Euro rates. It’s Thanksgiving in the USA so things will be very quiet across the Pond. 

Friday – Today in the UK we will see Consumer Confidence measures along with house prices data and mortgage approvals. In the EU it’s also busy with German Retail Sales, French and Italian unemployment figures, and EU wide unemployment, so Pound/Euro rates will be the one to watch today. 

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