Sterling weakened decisively during the course of yesterday against the US dollar and euro, by between 0.5 and 1%.
Speak to your trader asap to control the risk of further falls affecting your plans, or to lock in this rate if buying sterling. Please also consider Smart’s £2,000 summer referral bonus which ends on 30 September, if you have any friends, family or other contacts who may require currency assistance in this time of heightened volatility.
This was on the only day of the week when there were no major data releases, but the markets began to doubt that the Bank of England will be as assertive on interest rates next week as they had predicted.
That has been exacerbated this morning with very poor retail sales data for the UK in August, dropping 1.6% compared to July. In the US, for comparison, retail sales grew by 0.4%.
With the economy suffering but inflation remaining at below 10%, and the promise of the government’s energy subsidy keeping it there, there is increasing doubt that next week’s interest rate rise will be 75 basis points. The European Central Bank (ECB) on the other hand, did raise rates by 75 basis points last week. However, the World Bank warned yesterday that such moves are risking a global recession.
Next week on Thursday there will be the delayed Bank of England interest rate decision. Then on Friday is the new chancellor’s much heralded “fiscal event”, a kind of mini-Budget where Mr Kwarteng is expected to announce tax cuts.
He is also expected to make the politically unpopular decision to remove the cap on bankers’ bonuses, which was imposed by the EU following the financial crisis in 2008, as part of what is being dubbed “Big Bang 2.0”.
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