Monday, 27 January 2014

Why has Sterling risen today? / This weeks economic data

Monday 27th January 2014 
Sterling has had a pretty good run today, steadily rising and recovering from the drop we saw at the end of last week, as you can see from today's GBP/EUR chart below. There haven't been any significant data releases today, so why has the Pound risen? 

I think the reason for today’s gains are two-fold. Firstly, we have some key growth figures for the UK tomorrow. When they are released I’m expecting it to show Britain confirmed as the strongest major economy in Europe, so part of today’s gains are the market positioning itself ahead of the official release tomorrow. Just last week the International Monetary Fund upgraded its outlook for the UK in 2014, so this optimism is driving the Pound forward at the moment. 


A second reason for the gain today could be a general sell off of weaker currencies and assets. As you can read here, the fact that the FED may taper it’s QE programme this week have meant that investors have been selling riskier assets like the Euro, and buying perceived safer currencies like Sterling, so that will be another reason for the gains for the Pound today.

However despite recent gains for the Pound, it's worth bearing in mind that economists warn that the recovery remains fragile, with a downturn in consumer confidence posing a threat to positive momentum. In the last few months we’ve seen the Pound/Euro rate get to 1.21/1.22 several times, before dropping back away again. 

The currency market is very volatile at the moment, and so if you need to buy or sell currency in the near future, it’s worthwhile getting in touch to discuss your requirements with me. I can let you know your options and explain which way your exchange rate may move. In addition to my market knowledge, the rates I can source for you are often up to 5% better than banks and other financial institutions offer. 

What could affect exchange rates this week?

Below are the main scheduled releases that I think will have an effect on exchange rates this week. Tuesday will be a key day as we have the latest UK growth figures. Those that need to buy or sell Euros should watch out for this. 

Remember if you need to buy or sell currency and want the best rates, get in touch with me by clicking here and I can provide you a quote in addition to answering any questions you may have about which way the market is moving. The rates I can source can be up to 5% better than banks can offer, so it’s certainly worth comparing what I can offer you. 

Monday 27th January 2014 

As explained above today has been very quiet on the data front, with only some data from Europe that was a little better than expected. Due to the market selling riskier currencies and assets today however as I have outlined above, the Euro has weakened and GBP/EUR has risen. 

Tuesday 28th January 2014 

Today will be a key day for the Pound, as at 09:30am we will see the latest GDP figures from the Office for National Statistics. The forecast is to show quarterly growth of 0.7%. Recent UK data has been impressive, so if the number is better than 0.7% expect rates to rise. Of course if the number is lower, exchange rates could fall. There’s nothing else of note today other than a measure of Consumer Confidence from the USA. 

Wednesday 29th January 2014 

Nothing from the UK today, and only some minor German confidence data, so the GBP/EUR rate will continue to be driven by Tuesdays GDP numbers. 

Of more importance today will be the interest rate decisions from the USA and New Zealand, so we could see an effect on GBP/USD and GBP/NZD rates today. I expect the US may announce further tapering of their QE programme. If they do, then it may weaken the USD and send GBP/USD rates higher. 

Thursday 30th January 2014 

Quite a busy day today. Starting in the UK we see the latest Mortgage and Credit numbers. In the Eurozone we have several different measures of consumer sentiment released at 10am. This is followed at lunchtime by inflation numbers from Germany, Europe’s largest economy. 

Elsewhere we have some key US releases at 13:30pm: GDP figures, Unemployment and Jobless Claims. I therefore expect quite a choppy day for GBP/USD rates depending on the results. 

Friday 31st January 2014

The only UK release today is a measure of Consumer Confidence. Of more importance for the GBP/EUR rate will be inflation and unemployment numbers from Europe which are due at 10am. 


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Alastair Archbold