Today’s Headlines:
- Crowded week of important data releases: Last week saw some fresh volatility for the pound as it became apparent Inflation is falling, but not as much as expected.
- GBPEUR not far off one-year high: The pound came within touching distance of the 2024 highs but to get materially higher than last week’s top on GBPEUR, you would need to go back to the summer of 2022. For GBPUSD there is a similar positive mood, with last week’s peak breaking the highest since March.
- Strong time to consider securing rates: For those looking to purchase not just Euros and US dollars, but many other pairs, given the UK’s General Election is just 37 days away, now might well be a strong time to consider Lumon’s contract options to help manage the risk ahead.
- Important data releases to follow this week: AUD, EUR and USD data to be released which will shape the next directions in the FX markets, with inflation being monitored closely to determine when interest rates might be cut.
In Depth: This Week’s Market Update
We have a crowded week with plenty of important data releases to shape the next directions in the FX markets. Last week saw some fresh volatility for the pound as it became apparent Inflation is falling, but not as much as expected. This prompted traders to once again back the pound, as the ‘higher for longer’ narrative on UK interest rates became the central theme.
The pound came within touching distance of the 2024 highs on GBPEUR and wasn’t far off the one-year high. To get materially higher than last week’s top on GBPEUR, you would need to go back to the summer of 2022. For GBPUSD there is a similar positive mood, with last week’s peak breaking the highest since March, a two-month high.
These are all very worth points for those holding sterling looking to purchase not just Euros and US dollars, but many other pairs, given the UK’s General Election is just 37 days away. Now might well be a strong time to be considering a forward contract, or some of Lumon’s other contract options to help manage the risk ahead.
For more information on exchange rates forecasts for your specific pairing, please speak to your account manager here. We pride ourselves on a personal service to ensure our clients have the up-to-date information and fully understand all their options. This can prove invaluable in increased time of currency volatility, let us be your eyes and ears in the FX markets.
Looking at this week in more detail, there is not much UK data but plenty of releases from around the world to come, especially towards the end of the week, with Thursday and Friday looking more likely to influence the market. Of note is Eurozone Unemployment and Inflation data, plus US Inflation figures.
Inflation is being monitored very closely by central bankers and the FX markets to determine when interest rates might be cut. Interest rates are one of the key drivers of exchange rates and with signposting on these cuts changing, there is always the possibility of unexpected moves. Expectations continue to change, and with the added focus of the UK election ahead, and the US election in less than six months, we could start to see some increased volatility to FX rates.
Tuesday
Australian Retail Sales (AUD)
Wednesday
Australian Inflation (AUD)
German Inflation (EUR)
Thursday
Eurozone Unemployment (EUR)
US GDP (USD)
Friday
Eurozone Inflation (EUR)
US Inflation (USD)
