Monday, 3 August 2015

What could affect exchange rates this week?

Monday 3rd August 2015 
Good morning and welcome to a new week of updates about exchange rates. In today’s post, I’m going to take a look at the economic data releases for the week ahead that could affect exchange rates. Currently GBP/EUR sits a little above €1.42, and GBP/USD sits just below $1.56. 

What could affect Sterling exchange rates this week? 

There are lots of things that can change the value of a currency. Regular readers will know that in recent times it’s been events in Greece, and political situations like the Scottish referendum and UK election. Usually however, it’s fundamental data such as unemployment figures and interest rates. 

We already know well in advance what is going to be released using calenders such as this one, and analysts give their forecasts as to what they think the results will be. These forecasts are already priced into the value of a currency, so what’s important is not necessarily whether the figure is good or bad for an economy, but whether the figures are better or worse than expected. For example UK unemployment could fall, but that could still weaken the Pound if it didn't fall as much as had been expected!

Below I have listed this week’s main fundamental data releases that I think could affect exchange rates. If you have a currency transaction to perform and would like to get a quote or simply discuss what could affect exchange rates in the coming weeks, contact me today by clicking here

This week’s data releases 

Monday 3rd August 2015 – This morning we have already seen Inflation numbers from Europe and Germany which were better than expected, which strengthened the Euro and pulled GBP rates down slightly. This afternoon those with an eye on GBP/USD rates should watch for the US Manufacturing PMI Numbers. They are expected to show a reading of 53.5 so a figure higher than this could cause Sterling/Dollar to drop. 

Tuesday 4th August 2015 – The main UK release today is PMI Construction which shows business conditions in the UK construction sector and can affect the value of Sterling. Elsewhere the main news is from down under. Australia has Trade Balance figures and an interest rate decision. They’ve already cut rates twice this year to 2% so I don’t expect any further cut, but if they do expect GBP/AUD to rise. In New Zealand we have unemployment data figures that could affect GBP/NZD rates. 

Wednesday 5th August 2015 – GBP/EUR today could be affect by data from Europe – Markit Services and Retail Sales. The latter is expected to show a rise of 1.9%. If it’s lower than this, Pound/Euro could rise and vice versa. Over in the United States we have Inflation, Manufacturing and Services data, in addition to Employment numbers and the latest Trade balance figures. Lots to chew on for investors, which could affect GBP/USD rates. 

Thursday 6th August 2015 – Today is the most important one for Sterling, as we have a lot of data for Britain – Industrial Production, an NIESR GDP Estimate, and the all-important Bank of England meeting. It’s highly unlikely there will be a change to interest rates, but the minutes will make an interesting read, and also the Speech by Mark Carney, BoE governor at 12:45pm is also very important. If the minutes or the speech contain any comments hinting at an interest rate rise later in the year, expect the Pound to rise against other currencies. 

Friday 7th August 2015 – The UK is a little quieter today, but there are Trade balance figures released at 09:30am. Germany also has Trade balance figures, so GBP/EUR could be affected today. Over in the USA we have Jobs data including the Non-Farm Payrolls numbers. This usually creates quite a bit of volatility for GBP/USD rates as the figure often differs significantly from estimates. GBP/CAD could also have a choppy day today due to Canadian Unemployment figures and inflation numbers.  

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