Last Week’s Headlines:
European Central Bank: The ECB cut the deposit facility rate from 4% to 3.75%, marking the first cut since 2019 and ending a nine-month period of unchanged rates in the Eurozone.
Today’s Headlines:
UK Unemployment Data: Key figures that could influence voter sentiment ahead of the upcoming election.
UK GDP and Industrial Production Data: Critical indicators of economic health that could impact Sterling exchange rates.
US Inflation Data: A major factor in the Fed’s monetary policy decisions, with potential implications for the USD.
US Monetary Policy Statement: Insights into the Fed’s future plans, crucial for those dealing with USD transfers.
In Depth: This Week’s Market Update
Last Thursday, the European Central Bank became one of the first major central banks to cut interest rates, reducing the deposit facility rate from 4% to 3.75%. Interest rates in the Eurozone had remained unchanged for the last nine months, making this the first rate cut since 2019.
Both the Bank of England and the US Federal Reserve have shown no signs of cutting rates yet, so could the ECB continue on its own path in the near future?
The ECB did not suggest that they would be cutting rates again soon but indicated that the decision will be “data dependent.”
The upcoming UK election is less than four weeks away, and opinion polls are currently showing a clear Labour majority. However, as we have seen in previous years, opinion polls cannot be wholly relied upon, likely creating a significant amount of uncertainty for Sterling exchange rates across the board over the next few weeks.
UK unemployment data is due out on Tuesday morning, and voters will start to seriously consider their choices as this economic data is expected to have a large influence on voting patterns. This data will be followed by Wednesday’s GDP data as well as Industrial Production data for the UK, so make sure you’re well-prepared to move quickly if you have a pending currency transfer to make.
Also on Wednesday, the US will announce its own inflation data, followed by their monetary policy statement in the evening. Inflation is a key influence on central banks’ decisions, so watch this space if you’re moving US Dollars in the near future.
What events might move exchange rates this week?
GBP
- Tuesday– Unemployment data (UK)
- Wednesday– GDP data & Industrial Production data
USD
- Wednesday – US Inflation data & monetary policy statement
