Yesterday the pound continued to surge against the US dollar, making monthly gains of around 2.62% and weekly advances of around 1.48%. It is a similar story for GBP/EUR which maintains its weekly and monthly gains this morning.
Meanwhile, Britain’s recession fears continue to deepen according to new economic forecasts which came out yesterday. The UK’s leading economic forecasting group, the EY Item Club, said the economy will shrink 0.7% this year which is worse than the 0.3% they forecast in October. They also said that high inflation paired with the Bank of England’s rate hikes are major contributing factors.
Across the board, the latest purchasing managers’ index data will be released today, giving markets an idea on whether sectors such as services and manufacturing are expanding or declining. The first will be the eurozone’s manufacturing PMI at 9am and the last, will be the USA’s at 2:45 pm UK time.
The European Central Bank’s president Christine Lagarde spoke on Monday morning about inflation. Lagarde doubled down on the bank’s recent policy, warning that the ECB will continue raising interest rates quickly to slow soaring inflation. Investors seemed to be keen on Lagarde’s comments as EUR/USD rallied shortly afterwards on Monday.
In business news, Swedish music company, Spotify, says it will cut 6% of its 10,000 employees. The company, which is listed on the New York stock exchange, is expected to incur at least €35m (£30m) in severance-related charges.
Over in the US, recent economic data released from the country’s housing and manufacturing sectors, have suggested that the wider economy is facing rising headwinds.
As this week progresses, dollar watchers will have a slew of key data releases to digest which could all paint a similar picture. Those include mortgage rates, initial jobless claims, personal income and much more.
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