Pound to Euro breaches 1.16 for the first time this year
Pound to Euro exchange rates breached 1.16 yesterday, for the first time since mid-December. Sterling’s rise is being driven by improved economic forecasts for the UK and future interest rate expectations.
A transfer of £100,000 is buying €5000 more vs the low of the year.
UK inflation remains elevated at 8.7% which is much higher than the Bank of England’s target level of 2% and higher than expectations of 8.2%.
The probability of a UK interest rate hike on the 22nd of June is now extremely likely....
Pound reaches 2023 fresh highs against the Euro
Pound reaches fresh levels against the Euro but will this continue?
The pound reached the highest points of the year against the Euro this week. GBPEUR rates have traded at 1.1592 highs so far today. The pound is benefitting from expectations of higher UK interest rates.
It is worth pointing out sterling has been see-sawing all year (albeit trending higher) over such expectations. Markets can be very fragile and whilst this sentiment appears established, any data could easily change this.
Interest rate expectations are key, and crucial...
Will UK inflation cause the pound to rise?
UK inflation has dropped below 9% for the first time in over a year. Data released yesterday confirmed CPI year-on-year is at 8.7%. The BoE have been raising interest rates for 18 months in order to bring inflation under control so the drop will be welcomed by many.
However, analysts were expecting a reduction to 8.2% which suggests the BoE have more work to do. Expectations for an interest rate hike at the next BoE meeting is now 100%. 90% probability of a 25-basis point...
Sterling exchange rates remain high – will the pound weaken?
Sterling exchange rates continue to sit at elevated levels following a strong performance from the pound in 2023.
During yesterdays session GBPEUR once again rose within touching distance of the yearly-high, which was breached a week today.
A number of analysts and commentators are suggesting potential downside risk for GBPEUR in the coming weeks.
On Tuesday UK employment data confirmed the unemployment rate had risen to 3.9% which was above last months reading and expectations of 3.8%.
The unemployment rise will be monitored closely by the Bank of...
Pound Sterling Forecast – Has the Pound Peaked?
Does the latest FX research and data suggest the pound has peaked?
The pound has very recently touched fresh highs on GBPEUR of 1.1546 and GBPUSD of 1.2679. But since those highs this month, we have seen declines down to 1.1475 and 1.2457 respectively.
This begs the question, has the pound peaked?
Well, our research for a number of weeks has exposed potential sterling weakness. We highlighted the historical “Sell in May, go away” trend of sterling being weaker in May here. This strategy, had seen the...
Sterling strengthens ahead of Bank of England interest rate decision
Sterling stronger ahead of Bank of England decision
2023 is turning into a positive year for the pound after a disappointing end to 2022. Sterling is the strongest performing major currency of the year and exchange rates remain elevated against many of its major counterparts.
Cable (GBPUSD) is trading close to one-year highs while GBPEUR hit a 2023 yearly high during yesterday’s session. The pound is also trading close to yearly highs against the Loonie (CAD), Kiwi, and Aussie.
What is driving sterling higher?
The pound has been...
GBP exchange rates climb as focus turns to the Bank of England this week
The Bank of England is expected to increase the base rate of interest for the 12th consecutive time this Thursday, taking the base rate up to 4.5%.
An increase of 0.25% is expected, as the Bank of England continues its struggle to contain high inflation levels. Britain has the highest level of inflation within the G7 group of advanced economies and inflation remains above 10% despite the Bank of England targeting 2%.
Increasing interest rates often strengthen the underlying currency and this is a pattern we’ve...
Local elections cause movement for Pound vs the US Dollar
Pound Dollar rates hit highest level this year
The Pound US Dollar exchange rate has hit its highest level during 2023.
Sterling made gains vs the US Dollar following the news from the local elections showing that the Tories had lost a lot of seats overnight.
With the results still due to come out for many areas it will be interesting to see how this pans out.
Labour has so far gained a huge number as well as the Liberal Democrats compared to previous elections which is not...
Fed signals pause in interest rate hikes – will the ECB help or hinder...
The US Federal reserve announced last night that they would be raising interest rates for the 10th consecutive time. The move raised US interest rates by 25 basis points up to 5.25%, the highest level since 2007.
In general, interest rate rises can lend support to the value of the currency, however, the US dollar lost ground across the board following the Fed’s announcement. The Fed indicated that future interest rate rises could be limited given the potential restraint on the economy. Markets have digested...
Sterling in a strong position ahead of early May bank holiday
Economic data released at the end of last week showed positive and negative signals for the UK’s economic outlook. UK retail sales are down 3.1% year-on-year and 0.9% month-on-month. The monthly figure is worse than expected with markets expecting a negative reading of 0.5%.
PMI data showed some positive signs but was once again mixed. Services PMI trumped expectations of 52.9 with a reading of 54.9. However, manufacturing PMI was lower at 46.6 vs expectations of 48.5. A reading above 50 signals an expansion within...
