Last week the pound dropped further from its recent peaks against all its major currencies as the sellers start to take over the market for the short term. A dovish inflation report from the Bank of England has changed short term sentiment for the pound with many agreeing that the pound was over priced at its July peaks and we are now seeing a negative correction is this trend that is likely to see lower buying levels for the rest of the month and going into September. Even Friday’s positive data release did little to support the pound with the pressure now very much on. UK GDP estimates were revised up with the year on year figure at 3.2% growth, up from 3.1% last month and with the quarterly growth at 0.8% as expected.
Any sellers of foreign currency looking to buy sterling, keep in close contact with your account manager as we expect the best selling levels moving forward to be during the coming weeks and so this correction can present an excellent opportunity to sell at better rates considering the ground has been lost so far this year. Equally buyers in the next couple of month will want to think seriously about the risks of holding on and the depth and timescale of this corrections can be very unpredictable.
The week ahead will as ever provide a number of key releases that will define the level of volatility experienced in exchange rates. With no key data due out today, below is an overview of the highlights to look out for during the rest of the week:
Tuesday: 9:30am – UK Consumer & Producer Price Index; 1:30pm – US Consumer Price Index
Wednesday: 9:30am – UK Bank of England minutes; 7:00pm – US FOMC minutes
Thursday: 9:00am – Euro-zone PMI; 9:30am – UK Retail Sales & Public Sector Net Borrowing; 2:45pm – US Manufacturing PMI; 3:00pm – Euro-zone Consumer Confidence
Friday: 1:30pm – Canada Consumer Price Index