France
21 October 2024
Weekly Market Headlines:
- Pound to euro rates 0.5 cent off Friday’s 2 ½ year highs. The pound has retreated slightly from Friday’s 30-month high, but we remain very close to the best time to buy euros with pounds since April 2022.
- It is just 9 days to the UK budget and 15 days to the US election. The UK’s most significant budget in many years and a hotly contested US Presidential race could very easily change the outlooks and forecast on not just pound to dollar rates, but also affect the pound and dollar against other currencies, including the euro.
- Central Bank speakers could sway markets this week. Bank of England Governor, Andrew Bailey and European Central Bank President, Christine Lagarde both speak this week. With a focus on further interest rate cuts from both central banks ahead, their comments could affect pound to euro levels.
- Economic data focus on Purchasing Manager’s Index. The latest PMI data is released which provides the most up-to-date economic news for the UK, US & Eurozone. This may well influence FX market sentiment on pound, euro and US dollar rates
This week ahead could see some unexpected twists on GBPEUR levels as both Bank of England Governor Andrew Bailey, and European Central Bank President, Christine Lagarde gives speeches on monetary policy. We have recently seen markets sensitive to expectations ahead on interest rate cuts. So, the pound to euro rate could face some volatility as markets adjust to their commentary, and the latest perspective on the pace and extent of further cuts.
For the UK, press coverage around the most significant budget in many years could influence the pound. Talk of increases in borrowing by Rachel Reeve, plus tax rises and increased government spending, could all affect attitudes towards the pound. It is now just nine days away, and is well worth being aware of if you are planning any currency transactions now or in the future.
Looking to the back end of the week, the latest Purchasing Manager’s Index data for the UK, US & Eurozone might move the market in providing the latest ‘in-month’ data for the Services, Manufacturing and Construction sectors for these three economies. Viewed as the most current data available, it provides a fresh perspective on which way economic performance is trending and can thereby influence the FX market.
Globally, we have the IMF (International Monetary Fund) Annual Meeting, where reports on global and domestic economic growth projections may sway market sentiment. The US dollar continues its dominance with just 15 days to the US election, hitting 2 ½ month highs against the weaker Euro last week. We know from history the US election can greatly affect the FX markets, with average market movement around 4% on GBPUSD and EURUSD rates one month either side of the past three US elections.
With so much happening this week and in the coming weeks in the FX markets, now is an important time to review your strategy, to make sure you are aware of the latest news and forecasts. Lumon offer a variety of contract options to suit different approaches to the market. Whether you are seeking to limit your risk and fully understand your budget ahead, or feel the market could go one better and you wish to take advantage, let us be your eyes and ears in the market.
What events might move exchange rates this week?
GBP
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- Tuesday: Central Bank speakers
- Wednesday: Andrew Bailey speech
- Thursday: UK Purchasing Manager’s Index(PMI)
EUR
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- Tuesday: Central Bank speakers
- Wednesday: Christine Lagarde speech
- Thursday: Eurozone Purchasing Manager’s Index
USD
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- Thursday: US Purchasing Manager’s Index
