Pound Sterling Forecast – Sterling starts the week on the front foot

Sterling exchange rates have started the week off fairly positively against most major currencies, most notably continuing the strong finish to last week against the Euro, with GBP/EUR now sat above 1.1650.

The reason this pairing in particular has moved in Sterling’s favour more than others is down to the ECB (European Central Bank) interest rate decision and press conference delivered by Christine Lagarde on Thursday.

The ECB did raise interest rates as expected, however there was a slightly dovish tone around this hike, there were suggestions that further hikes would be more data driven than nailed on, and this has led investors and speculators to perhaps hold off on Euro for the time being whilst they wait and see the tone of both the Federal Reserve and Bank of England, both of whom have interest rate decisions due out this week on Wednesday and Thursday respectively.

Expectations are for both to hike by 75 basis points, but as with the ECB meeting it will be the tone in the subsequent statements that will be of most interest to investors assuming there are no great surprises in the decisions later this week.

With the mini-budget being scrapped and a full budget being announced for Thursday 17th November it will be hard for the Bank of England to be able to fully lay out fiscal plans moving forwards as they will not know what the Government are set to do.

It does seem that the markets are seeing some stability back for the UK with Rishi Sunak as PM and Jeremy Hunt as Chancellor, so it wouldn’t surprise me to see the pound have a solid week and in fact a better few weeks ahead, it does seem that despite the circus act we have had over the past few months we do now have a safe pair of hands steering the ship and that the cabinet that is in place are giving the markets a little more confidence.

The Federal Reserve meeting is on Wednesday evening for those with an interest in USD, and the BOE meeting is at midday on Thursday, this could send the pound either way against all majors so it most certainly is one to keep an eye on.

Finally, on Friday we have the Non-Farm payroll data out in the US, you may not think this is of great significance, but it can be a big market mover for all major currencies as it measure the number of people in non-agricultural employment in the US and is taken as a barometer as to the health of the US economy. They take non agricultural measures due to the seasonality that brings so to keep the data  as realistic as possible, and straight after the release it can lead to a flood of money into or out of the Dollar, it also impacts investors and speculators risk appetite so keep a keen eye on this market information early on Friday afternoon.

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