The economic data has been flying in this week, not just in the UK but in the eurozone and USA too, and the currency markets have been reacting as we reach the end of the ‘interest rate raising cycle’, as economists put it.
For homeowners with mortgages it cannot come soon enough, although hopefully they are not relying on interest rates coming down too quickly, as that may not happen. Yesterday the Bank of England said that mortgage arrears are their highest since 2016, rising 28.8% over the year.
Then this morning the latest GDP data has sent sterling down to its lowest level for a month against the euro and three months against the US dollar.
These are tempestuous times for currencies. What might be next? While sometimes it can be tempting to just hide under the duvet, taking a glass half full view of the world, the picture isn’t so bad. Certainly when it comes to exchange rates, GBP/USD is 6% stronger than this time last year and GBP/EUR around 0.5% stronger.
Worth locking in with a forward contract? You can do that with a call to your trader on 020 7898 0541.
Today we will get the US inflation figure and tomorrow the European Central Bank’s interest rate decision. Given the interconnectedness of the global economy, both of these have the potential to affect your exchange rate.
