It was a fairly quiet week for sterling exchange rates and events around the globe stole the headlines. Donald Trump and ‘trade wars’ was the major talking point in the US. At the start of the week Trump announced that the US would raise taxes on aluminium and steel imports, however by the end of the week he also announced many countries would be exempt, which arguably halted major currency fluctuations.
The European Central Bank released their latest interest rate decision, and no surprise interest rates remained on hold but the the policy statement did give an indication that the bond buying program quantitative easing could be coming to an end. President of the European Central Bank Mario Draghi, did try to talk it down in a bid to devalue the euro, however it gives off the vibe that the euro is set for another year of strength.
The key talking point for the UK were the ongoing Brexit negotiations. The UK and EU cannot come to an agreement in regards to the financial services, which is a concern for the UK and sterling exchange rates.
Factors impacting sterling exchange rates this week
On Tuesday, UK Chancellor of the Exchequer Philip Hammond will deliver his Spring budget update. When Mr Hammond was elected Chancellor he made it clear that the Spring budget was an update and the main budget was in the Autumn. Nevertheless this event has the potential to have an impact on value of sterling.
The Chancellor should be able to provide an upbeat update. Over the last 10 months the budget deficit has been released lower than forecasted. Furthermore the office for Budget responsibility are expected to increase growth forecasts for the next 2 years.
Around the globe US inflation data is to be released Thursday afternoon at 12.30pm. This release could provide more clarity to the amount of interest rate hikes to expect this year for the FED. Most forecasters are suggested between 3 or 4.
European inflation is to be released Friday at 10am. The strength of the euro has continued to improve over the last few months therefore I find it difficult to see how the price of goods and services have become more expensive. Therefore I actually expect inflation to remain the same or fall.
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