Sterling starts the week having been climbing steadily since last Tuesday, and is well over 1% stronger than it was at the beginning of August against the euro.
To lock that in with a forward contract, call your trader on 020 8108 5163.
Almost exactly the reverse is true against the US dollar, where the pound has shown little sign of recovery from its 1% drop on Friday afternoon.
At Smart Currency we always warn against relying on economic predictions, and we don’t make any ourselves for exchange rates (although we do, of course, amalgamate everybody else’s in our Quarterly Forecast, mainly to show how unreliable they are, see here).
A case in point is the UK’s Office for National Statistics’ (ONS) economic analysis, which, if you saw the news on Friday, has been shown to have been woefully pessimistic about the UK’s economic recovery post-pandemic. As the FT put it: “instead of the UK being a global outlier, marked by its feeble economic recovery from the pandemic, the new data shows it to be in the middle of the G7 pack, roughly equal with France and ahead of Germany.” This is, says the paper, just the tip of the iceberg when it comes to reassessing the UK’s productivity and growth since Covid.
How does this relate to currencies? Well, it may not, but it’s nice to be get some good news on a Monday morning when the summer has just finished.
Returning to currencies, however, this week will be full of slightly lower-level economic data for the UK, starting with news from the high street this morning, new car sales tomorrow and the housing market on Thursday. Next week things liven up considerably with unemployment news and economic growth figures, so if you have a major transaction coming up, this is the time to secure that rate and avoid any disappointment when you need to make that transaction.
There is plenty coming from the euro and dollar sides this week including several members of the European Central Bank’s (ECB’s) interest-rate setting panel speaking today. Watch out too, for any radical revisions to the PMI data in the final readings for the Purchasing Manager’s Index across Europe, the UK and the USA this week.
