Sterling has dropped off over the last week as various other central bank actions have strengthened the Euro, Aussie and Kiwi to name a few. The ECB surprised markets by increasing growth forecasts and suggesting they have enough in the tank to deal with any problems. The RBNZ hiked interest rates in New Zealand, and the RBA have once again made it clear that they are likely to maintain interest rates at current levels. All of these actions helped strengthen their respective currencies, and sterling seems to have borne the brunt of the sell-off despite their being very little negative news to affect the pound. So is there anything in the next couple of days that could provide a boost for sterling exchange rates?
Mark Carney, the Governor of the Bank of England, is due to speak later this afternoon, and his cautious optimism of late has tended to try and reign sterling back from a big appreciation in value. However it does paint a picture of the UK recovery gaining traction which will likely keep pushing sterling up. We also have the Bank of England Minutes and UK unemployment figures out at 9.30 tomorrow morning. Jobless figures on the whole have been reasonably good but I am sceptical about how quickly the jobless rate came down (part time jobs, zero hours contracts etc) so I don’t think this will provide a huge boost. I also think it is unlikely that the BofE Minutes will show anyone in the MPC will have voted for a rate hike as of yet but at some point this will happen and could be a real shot in the arm for the pound when it does.
We also have the UK budget on Wednesday and whilst this is often a day political one-upmanship I suspect that George Osborne may want to keep his powder dry for next year’s budget being an election year. However I do think he is likely to point to increasing growth rates as a sign that things are on the right path and more than likely will reinforce the view that they are committed to deficit reduction- news that will likely keep the markets happy and help sterling. The other big news on Wednesday night will be the Federal Reserve Minutes which will give another insight into the pace of the Fed tapering of QE. Again this could be a big market mover so be ready just in case.
In all I think GBP EUR in particular is probably undervalued so if you are selling Euros I would look to move quickly, whereas Euro buyers may want to wait a week or two. If you are looking to make a currency transfer and would like to use a broker with proven exchange rates then feel free to contact Colm at [email protected] or call on 01494 787 478 and I would be happy to help.