After a sharp fall midweek, the pound has staged a slow recovery against the euro since then that has taken it close to the 30-month highs of late September.
There’s no sign of recovery against the US dollar, but that’s hardly surprising given the Non-Farms Payroll result from Friday, which showed that America created almost twice as many new jobs in September as had been expected.
Given how close we are to the presidential election, signs like these that the US economy is heading for a soft landing are probably too late to do much to bolster the Democrats’ campaign. Moreover, there is now no opportunity for the Fed to cut interest rates before the election as the Fed, along with the Bank of England, will be making that decision on 7 November – two days after the election.
It’s interest rates affecting the pound, with the governor of the Bank of England sending the pound down on Thursday with promises of interest rate cuts, but his chief economist giving a “hold your horses” sort of speech the next day that helped sterling to recover.
Either way, we have exactly a month before the interest rate decision and plenty for the markets and the Bank of England to chew on before that. The period to watch out for starts on Friday with Gross Domestic Product (GDP), where some growth is expected, then the following week there is unemployment, inflation and retail sales.
To avoid the risk of data over this period negatively affecting upcoming transactions, why not lock in today’s rate? GBP/EUR is only a fraction off its best for 2½ years. Call your account manager on 020 8108 5163.
