It was a broadly negative day for sterling yesterday, after a week of gains against the euro had offered some relief for those with major purchases upcoming in the eurozone. There was no particular reason for the weakening in sterling, in a day without any high-level economic data, so perhaps just a correction from the near-2% gain for GBP/EUR between the depths of Monday morning and the giddy heights of Wednesday evening.
The month ended as the worst for GBP/USD in two years. The US dollar continued to bounce back, buoyed by a generally positive – or at least less negative – view from the markets about tariffs and the continued resistance of the US Federal Reserve to interest rate cuts. Will the dollar continue to thrive after the news this morning of further tariff rises though? These include new 35% tariffs against some Canadian goods and 50% on Brazilian.
The markets will be looking at the US Non-Farm Payrolls data with more than their usual interest this afternoon, to get a sense of how the economy is reacting beneath all the hoopla.
This morning there was good news for UK homeowners, with the Nationwide House Price Index showing a rise of 0.6% in July, rebounding from a significant loss last month and way ahead of expectations. The betting is that the market will be further boosted by an interest rate cut from the Bank of England (BoE) next week.
The eurozone, at least, continues to manage low inflation despite low interest rates, showing that the dream of “immaculate disinflation” is possible for central banks. French inflation is 1%, Italy’s 1.7% and Germany’s 2%, and we will shortly get a reading for the whole eurozone.
As we hit August, whatever your vacation plans are, rest assured that Smart Currency will be here as normal throughout the summer.
Make sure any upcoming transactions are protected against the risks of sudden market movements, which are just as likely in August as any other month. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 7898 0541 to get started.
