Sterling back on the front foot – will the rise continue?

Sterling back on the front foot – will the rise continue?

Pound sterling has started the days trading on a positive foot gaining ground against a basket of major currencies. GBPEUR is trading within half a cent of the three-month high. Cable (GBPUSD) is trading close to four-month highs.

A transfer of £100,000 is buying $17,000 and €8000 more vs the low of the last three months. Now could present a window of opportunity for those looking to buy foreign currency with sterling.

Figures released yesterday showed that inflation has begun to slow in the eurozone. Inflation is still extremely high at 10% and well above the ECB’s target 2%. However, the markets were expecting a reading of 10.4% following last months figures at 10.6%. The lighter than expected figure puts less pressure on the on the ECB to aggressively hike interest rates moving forward.

Sterling continues to be bound to global risk sentiment. Yesterday, Fed Chairman Jerome Powell suggested that the current rate hike cycle could be coming to an end in the US. These comments are positive for the US and global economic outlook.

The US dollar tends to gain value at times of economic uncertainty and lose value when investor sentiment is positive. A weaker dollar has pushed cable and GBPEUR higher. EURUSD (the most traded currency pair globally) is trading close to five-month highs. Another signal that risk appetite is beginning to improve.

€100,000 is buying $7000 more vs the low of the last month.

If you have an upcoming currency requirement and would like to be kept informed of developments, please feel free to contact me directly on [email protected].

We have a number of tools available at Lumon to help minimise your currency risk, via market orders, forward contracts and rate alerts.