Sterling is still trading at exceptionally good levels against a whole basket of currencies although there was some pressure put on the pound when the headline rate of unemployment actually showed at 7.2% not 7.1%. For me tomorrow’s retail sales figures could also be a potential problem for the pound. On the whole Britain is on the road to recovery but I think there has been a tendency of late for the pound to rally too quickly on the back of positive data, only to drop back at some unxepectedly weaker news.
Given large parts of the country have been underwater lately, whilst the rest has been moaning about how long the poor weather will last, I would be surprised if many have seen shopping as a priority. Distribution networks in some areas will have been affected, and the retail figures may well come in worse than expected. If this is the case then sterling may take a temporary dip so anybody holding GBP and needing to transfer in the short term may want to keep a close eye on this at 9.30.
That is not to say everything is doom and gloom, and certainly the pound made good headway yesterday against the Aussie, Kiwi, and Rand after the southern hemisphere currencies suffered following the US Federal Reserve Minutes. Also European inflation data today proved disappointing which helped the pound hold its own against the Euro. However the US Dollar moved back against the pound after a 4 1/2 year low on Monday and I suspect we have already seen the best levels the pound will reach against the Dollar in the near term. With the US economy getting back on track slowly, Cable rates should gradually recede, but I think this greater global confidence should help feed through to sterling via the financial services sector and see the pound have a better year against many European currencies.
Another data release to watch tomorrow is the Canadian inflation figures. There has been a lot of speculation over what the Canadian central bank will do over the coming months so keep a close watch on the release at 13.30 for possible clues. CAD rates are also exceptionally good so if you are transferring money to Canada now may be the time.
To this end, if sterling does dip tomorrow, it may provide an opportunity for Euro sellers, as I think the move will only be temporary and levels will likely recover over the coming weeks. But if you are buying a property abroad imminently, feel free to get in touch in case you need to protect yourself against tomorrow. Feel free to email Colm at [email protected] or call 01494 787 478.