The pound recovered intra-week losses of almost a cent against the US dollar on Friday, while GBP/EUR also rallied to end the week just 0.1% down. A week of ups and downs for the euro saw it eek out only marginal losses against the US dollar.
If it’s not on your radar already, it’s worth bearing in mind that the UK budget will be unveiled on Wednesday (6th March). You won’t find many more impactful economic events, particularly with the pound positioned somewhat precariously. That means if you’re looking to make a large transaction in the near future, you’d be well advised to protect against market movements.
To do that, secure a fixed exchange rate now with a forward contract; call your account manager on 020 7898 0541 to get started.
The big question is how much room chancellor Jeremy Hunt can make for tax cuts. The conservative government seems to think that only meaningful tax cuts can save its bacon come election time, but they must first balance the books before they can offer too much. Various talking heads from the City called for restraint last week, although there will no doubt be a temptation to pass out gifts. Whatever happens, we’ll be here to cover all the developments as well as what they mean for your budget.
Turning our attention away from the corridors of Westminster, eurozone inflation fell in January, albeit by less than expected. The headline rate decreased from 2.8% to 2.6% — good news, right? Well, experts had forecast it to drop to 2.5%, although euro buyers would have been enthused by the slight bump this gave the single currency on Friday.
The European Central Bank (ECB) will announce its latest interest rate decision this week. All signs point to a hold at 4.5%, but we seem to be entering the final straight before those levels can be reduced.
Over in the US, the ISM manufacturing survey undershot expectations. February’s number dropped from 49.1 to 47.8, well below the expected 49.5. That came as the final number for the Michigan Consumer Sentiment survey was revised significantly lower, so a slightly less optimistic end of the week for the American market.
Here’s what to look out for this week…
The first real action takes place on Tuesday with the final numbers for the European HCOB composite PMI, along with S&P’s services PMI in the UK. US ISM services PMI may well cause some action in the afternoon session.
As mentioned, all eyes will be on the UK budget on Wednesday. That begins a busy day in currency markets, as Fed chair Jerome Powell gives remarks and the latest JOLTs job openings data feeds through the wires.
It’s then the turn of the ECB on Thursday with their interest rate decision, before we’ll round off the week with non-farm payrolls and unemployment numbers out of the US.
