At the end of a quiet week for sterling with little movement, the value of your pounds overseas will be subject to economic news from the other side of the Atlantic today and next week.
Global exchange rates are likely to be affected by a key jobs report from the USA this afternoon – Non-Farm Payrolls (NFP) – which arrives at 1.30pm UK time. Layoffs remain unusually low in America, but companies have been reluctant to add workers. That matters for Federal Reserve policymakers who are wrestling with inflation that remains too high for comfort, while the jobs market is weak enough to make further interest-rate increases hard to justify.
We will also get the US inflation report on Wednesday, which – as we enter the final mile ahead of the US Midterm elections – could well shift the dials.
We’ve just had an update on the UK housing market. The Lloyds House Price index (previously the Halifax) showed growth of just 0.1% in July, taking it to an annualised 0%, its slowest since November 2023. It wasn’t all bad though – Northern Irish prices are powering upwards at 7.4%, Scottish by 3.6% and the North East of England by 2.8%.
A slow housing market in most of England is being blamed on inflation and interest rate doubts, as confusion reigns over what is happening to oil supplies, now also being impacted by Houthi action against Saudi Arabia. Iran is likely to keep the pressure on Trump until the Mid-terms at least, which means that the Bank of England can only guess at inflation and hence interest rates.
One thing we do now know for certain, the UK’s Autumn Budget will be on 28 October. Once again the question of whether economic growth can solve the UK’s tax and spending problems will be much discussed, and next week we will get the latest GDP numbers as UK data comes back to the fore. The picture from the Purchasing Managers Index (PMI) surveys on Wednesday was certainly encouraging, as UK services firms powered back into a positive mood.
GBP: Pound gains on safe-haven currencies
A quiet week for sterling exchange rates continued yesterday. What movements there were, were positive against the Swiss franc (up 0.6%) and the Japanese yen (up 0.3%). It’s been a quiet period for data, and that continues in the early part of next week, until we get the Gross Domestic Product (GDP) reading on Thursday.GBP/USD: the past year
EUR: Markets look for direction from beyond the eurozone
There wasn’t much life in the euro either yesterday, although overall it has been a positive week for the single currency, gaining like the pound on safe-haven currencies such as the yen and Swiss franc, but also the Norwegian krone – bad luck for Nordic property hunters on the Mediterranean costas this summer. After a run of high-level data things go a little quiet on the wires for eurozone numbers too next week. Oil, events in the Middle East and US data, therefore, could be in the driving seat for euro exchange rates.GBP/EUR: the past year
USD: Jobs survey will test dollar today
This is where the action will be this week with the markets looking for more clues on the US economy as the start of the end of summer means that attention turns to the US Midterm elections three months away. Watch out for Non-Farm Payrolls this afternoon, then inflation on Wednesday.USD/GBP: the past year
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