The aftermath of last week’s BoE, ECB and Federal Reserve interest rate decisions continues to weigh heavy on exchange rates. Sterling was on the back foot on Monday and the gloomy mood added pressure to the already risk-sensitive pound.
GBP/USD fell to a fresh one-month low on Monday morning and hovers around the same position this morning. Against the euro, sterling remains close to its 2-year low hit yesterday.
On Monday, hawkish comments from the BoE’s Catherine Mann had no impact on sterling. Mann advocated for further rate hikes, however her hawkish stance failed to lift sterling out of its new lows.
In an interview on Monday, former prime minister Liz Truss admitted that cutting the 45p tax rate was “perhaps a bridge too far”. According to Truss, she was not to blame for current rises in interest rates. The former PM says its unfair “to blame interest rises on what we did”.
Spain’s latest consumer confidence data revealed that the indicator rose to 73 in January, from 68 in December. This marked the highest reading in seven months and was well above market expectations of 59.3.
Meanwhile, eurozone retail sales slipped 2.7% in January. The recent figures are down from a 1.2% gain in December, and were lower than market expectations (of -2.5%).
Investors look ahead to America’s latest balance of trade data which will be released at lunchtime today. The previous reading revealed that the US trade deficit narrowed to $61.5bn in November last year, pointing to the lowest since September of 2020, and below forecasts of a $73bn gap. Today, markets are anticipating the numbers to decline further.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Personal Trader on 020 7898 0541 to get started.
