Monday, 13 March 2017

Very important week ahead for exchange rates


In my recent post I outlined the reasons that the Pound may fall further, and that proved to be the case. We saw poor UK data on Friday that weakened the Pound, and the Euro gained strength on rumours that they may raise interest rates in the EU later this year.

This pushed GBP/EUR rates into the €1.13's however this morning we've seen a slight recovery to the mid €1.14's. Pound/Dollar rates also fell as strong US jobs data last week mean it's almost a given the US will raise interest rates later this week. (Higher interest rates strengthen a currency due to the higher return on offer, and that's why the Euro and Dollar have become more expensive to buy.)

Important week ahead for exchange rates


The week ahead is going to be a very important one indeed for exchange rates, as there are several key events that could have a very big impact indeed on the currency markets. Let's have a look at what we might have in store.

  • Article 50 - Today the commons will vote on whether to reject the amendments the lords requested, and it's likely these will be rejected, paving the way for Theresa May to trigger article 50, possibly as soon as tomorrow. When this is done, there's a good chance the Pound will fall as the formal process to leave the EU begins along with the negotiations. 
  • Dutch elections - These happen on Wednesday, and it's expected that Gert Wilders will win the vote. It's unlikely he will be able to form a coalition government however, although the vote will be seen as a litmus test of the upcoming elections in France and Germany. If he wins, the Euro may weaken causing an upward movement in GBP/EUR rates, but this may well be tempered by the Brexit negotiations.
  • US interest rates and Budget - On Wednesday, the USA will announce whether they will be raising interest rates. I think they will go ahead and do so, and if that's the case, expect GBP/USD rates to fall as the Dollar strengthens. The Budget will also be watched closely, as markets will be keen to know Trumps economic plans.
  • UK economic data - in the week ahead we will see: UK employment figures, the Bank of England interest rate decision, and the accompanying Monetary policy summary. Any indications that the BoE will be leaving interest rates unchanged for the foreseeable future despite rising inflation will likely weaken the Pound and pull GBP exchange rates lower. 

Protection against adverse exchange rate movements


As you can see from the outline above, there are many key things happening this week that could affect your exchange rate adversely. If you have a currency transfer to make and would like a free consultation on what is happening, and how to protect yourself against the rate moving against you, then make a free enquiry with us today by clicking here.

We offer exceptional exchange rates and a range of different contract types to help protect you against a volatile market. In the current climate it's more important than ever to ensure that you speak to an expert currency broker to ensure you make the most of your currency.

Click here or complete the form below to make a free enquiry today.