Sterling has wilted overall over the past two weeks against both the euro and US dollar, with a fall of over 0.5% against the euro since last Tuesday. That has accelerated so far this morning.
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Sterling is still at an eight-year high against a basket of currencies. However, that has been based on interest rates being relatively high in the UK while other countries – including the eurozone, Canada and China – have already started cutting.
Will the Bank of England follow this week? We will get an answer at midday on Thursday. The nine-member interest rate setting panel at the BoE will be analysing data as diverse as container shipping costs, as well as inflation and pay awards from individual industries and economic data such as Gross Domestic Product (GDP). And while independent of government, the panel may be influenced by the needs of the chancellor Rachel Reeves for economic growth asap.
Before that there will be quite a bit of data from leading economies this week, starting with mortgage data from the UK coming shortly this morning. Are lower mortgage rates – already appearing ahead of the expected rate cut – going to perk up the property market?
It’s like the Olympics of economic data this week. There is GDP and inflation from across the eurozone, influential US employment reports and interest rate decisions from the US Federal Reserve (albeit with no change expected) and the Bank of Japan.
By Friday, exchange rates are unlikely to be where they are today.
