Sterling has had a truly remarkable year making firm gains against pretty much all currencies and presenting some of the best rates to buy a foreign currency with in years. GBPUSD hit a 5 year high, GBPEUR has hit a two year high (and not far off a 6 year high!) and GBPNZD and GBPAUD are also both at multi year highs… Clearly sterling is faring well but this now begs the question will it continue?
October is looking like a tough month for the pound with economic releases from September’s data likely to be poor owing to lower business and consumer confidence due to the Scottish referendum. I feel this is likely to feed into the rest of the year and with it interest rate hike expectations (currently expected in April) liable to be pushed back further. Economic growth in the UK is currently running at 0.8% and with house prices not rising as fast as previously I think the need to raise rates will dampen in Q4.
Tomorrow is some very important Eurozone news on Inflation which will be indicative of how much QE we can expect Thursday from the ECB. With so much volatility surrounding this release making some careful plans ready to trade on the news seems sensible.
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