Tuesday 22nd April 2014
Good afternoon, and welcome back to regular currency updates after the Easter break.
It’s been a quiet start to the week with no major data releases, and Sterling/Euro remains quite close to €1.22, with Sterling/Dollar hovering a little above $1.6800.
Will Pound/Euro rates go up or down this week?
There are 2 key things happening this week that I think will affect exchange rates. I’ve listed the week’s data at the bottom of today’s post, but I will also go into a little detail about the main releases that I think could change Pound/Euro rates.
In effect we have the central banks of the UK and Europe pulling in different directions, and this will likely have an impact on which way the Pound/Euro currency pair could go in the coming weeks and months….
Bank of England could cause GBP/EUR rates to fall
Tomorrow morning we have the latest minutes from the BoE meeting, and this will show what was discussed with regards to interest rates. I expect they may well hint that they will now be looking at a broad range of factors that will determine when they will raise interest rates.
If this hints that rates won’t rise until well into 2015, then the Pound may weaken off and erode the gains we saw last week.
European Central Bank could cause GBP/EUR rates to rise
On Thursday, the European Central Bank President Mario Draghi is scheduled to give a keynote speech. He recently made clear the euro's strength is a possible trigger for the central bank to ease monetary policy. Very weak inflation in the euro zone, due partly to the strong exchange rate, has raised pressure on the ECB to further loosen monetary policy to stimulate growth.
In the past few weeks Draghi has brought the currency into focus and warned that any further strengthening could lead the euro zone's central bank to use unconventional tools such as asset purchases. If he expands on this further, the Euro could weaken and GBP/EUR rates could rise.
So as you can see, we could see rates move either way this week due to the above. To discuss your requirements in more detail, or if you would like a quote on the best exchange rate I can get for you, click here to send me a free enquiry today.
The rest of this week’s economic data
Wednesday 23rd April 2014
The important data today is the Bank of England minutes, which show what was discussed in their recent interest rate meeting. They could well hint that a rate hike is some way off, which would weaken the Pound and cause exchange rates to drop.
We also have Inflation data from the Eurozone, Home Sales data from the United States, and an Interest rate decision from New Zealand. I think they will raise rates, which will cause GBP/NZD to fall if they indeed choose to do so.
Thursday 24th April 2014
There is nothing of note from the UK today, but as I mentioned in my introduction, we have a speech by the ECB president Mario Draghi. He could hint at monetary easing, which would weaken the Euro and cause GBP/EUR rates to go up.
Stateside we have Jobless claims numbers, so GBP/USD could be affected.
Friday 25th April 2014
We end the week with UK Retail Sales and mortgage approvals, and a consumer sentiment survey from the USA.
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