The start of a pivotal week for the pound and US dollar has started very much in sterling’s favour. GBP/USD gained 0.25% in early trading, with GBP/EUR not far behind.
This may come as a surprise bearing in mind the endlessly negative headlines around the government and the UK economy, with hundreds of thousands marching in the capital at the weekend and threats to topple the prime minister from within his own party.
However, the markets seem to be looking at the financial side of things and the only game in town this week is interest rates – with the Bank of England deciding on Thursday and the US Federal Reserve the day before.
For the UK we have a welter of data before all that, with earnings and employment tomorrow and inflation on Wednesday.
You might think that the British public would be happier, given their recent pay rises which have been averaging nearly 5%. The issue was highlighted by the Financial Times this morning, which pointed out that average pay rising at this rate is not helping the Bank of England to reach its 2% inflation target. These earnings rises also feed through into similar pension and benefits increases too.
The government will be desperate to change the narrative, and they were not helped by last week’s GDP result which showed a flatlining economy in July.
So, it’s a hectic week for sterling, and it has never been more essential to 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 account manager on 020 7898 0541 to get started.
