Sterling came under pressure in Tuesday’s session, losing around half a cent against the US dollar and falling off multi-month highs against the euro.
GBP/EUR fell as more evidence of European economic stagnation arrived. Preliminary figures for German GDP in Q4 showed a 0.3% contraction, and while Italy and Spain’s numbers were more positive, the eurozone economy as a whole grew by just 0.1% in the last quarter of 2023.
Attention will soon turn to the Bank of England (BoE) and the Federal Reserve, both of whom have interest rate decisions set for the next two days. The Fed is first up and while few are expecting them to cut interest rates, currency markets are no stranger to a big surprise.
The same is true for the BoE, which relays their own decision tomorrow. Headline inflation bumped up slightly to 4% in December compared to 3.9% the month before, and Andrew Bailey and co are expected to err on the side of caution for now.
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The number of job openings in the US economy increased by far more than expected in December. Seemingly immune from high interest rates, American companies increased the number of unfilled positions by over 100,000 from November. That figure is now at its highest level in over three months.
The IMF issued a rare slap on the wrist to UK chancellor Jeremy Hunt yesterday. The global finance body warned that his widely-predicted plan to cut taxes was in direct conflict with the need to provide essential public services and maintain fiscal discipline.
Average mortgage costs in the UK fell for the first time in over two years, according to the BoE. Homeowners across the land can breath a little easier now, as mortgage approvals rose and the average interest paid on new mortgages dipped to levels not seen since 2021.
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