We have a really important week ahead for Sterling exchange rates, with a number of key economic data releases due over the course of the trading week, and the delayed Autumn Statement to be delivered on Thursday.
There are still concerns over the outlook for the U.K economy, so economic data is being watched closely by investors, and we have some key releases over the next few days which could cause the pound to be particularly volatile.
Tomorrow morning we have unemployment data, expectations are for the unemployment rate to remain unchanged at 3.5%, average earnings with bonus to be at 6% and job losses could come in at 155k.
Any of these figures come out different to expectations and that is where you could see the market react swiftly, currency markets tend to price in expectations and then rapidly correct should those expectations be incorrect.
Wednesday we have inflation figures, and as regular readers will be aware inflation is one of the big talking points for the U.K and most of the world. Inflation rising can lead to Central Banks, for example the Bank of England raising interest rates further, higher interest rates means higher borrowing costs and can essentially lead to less money in consumers pockets, slowing down the economy.
The market expectation for headline CPI inflation is 10.6% year on year for October, and the core reading to be at 6.4%. Given the fact the Bank of England have a target of 2% this still is way off where it needs to be.
It is a hard call on which way Sterling exchange rates could move should a lower figure come out, on one hand it would be seen as a good thing as it shows inflation is slowly coming back, however it would lead to interest rate expectations moving down, and a higher interest rate can be deemed as positive for a currency, so the pound could actually move either way on Wednesday regardless of the figure, it really depends how the markets digest the news and what it does for investors mood towards the pound.
Thursday we have the long awaited Autumn statement, we all know what happened last time we released a mini budget in the U.K, the pound dropped off a cliff as it appeared that the Government got it drastically wrong.
Fast-forward a few weeks and we have a new Prime Minister and Chancellor, both are seen as a safe pair of hands, expectations are that this statement will be robust, it will set out a path for the U.K to dig its way out of the current deficit and how that is done will be spread across everyone.
Usually, a few leaks come out over the week so if you are in the position that you need to move money either out of or into the pound then this week really is one where anything could happen at any time.
It may be sensible to consider placing a market order or hedging some of your risk if you are concerned that the rates could most signifincantly, or to have a proactive and efficient broker on your side that can call you should there be any news released that may either make your overseas purchase cheaper, or to make you get more money for your foreign currency you are brining back.
Here at Pound Sterling Forecast we can help you, we do not only inform clients of market movements but we have been assisting clients with foreign exchange for 22 years, we pride ourselves on the very highest levels of service and fantastic exchange rates.
Feel free to contact us today, you can email me on [email protected] with a description of what you are looking to do, or you can click here to put in a quote request. and we will get back to you.
