The pound has returned close to its strongest position since August 2022 against the euro, and its strongest since last July against the US dollar.
The dollar’s weakening is easy to explain. It follows a revision downwards of previous new job numbers in the US (Non-Farm Payrolls) and a sharp rise in the unemployment rate to 3.9%.
In the eurozone, the European Central Bank lowered its inflation forecasts last week, which weakened the euro. This is the topsy-turvy world of the currency markets, where good news for everyone else (inflation under control), can weaken a currency.
But this week the UK releases its own employment data, which opens the door to sterling weakening like the dollar.
That happens at 7am tomorrow, with unemployment expected to stay at 3.8% and average pay rises slipping very slightly.
Then on Wednesday, we have Gross Domestic Product (GDP). If you remember the last time GDP came out it showed the UK in a ‘technical’ recession. The markets expect the country to be moving out of that, with some growth in the economy. If that isn’t shown, your exchange rate may suffer.
Why not speak to your account manager about locking in this relatively strong rate? You can do that with a call to your trader on 020 8108 5163.
