Sterling starts the week at its strongest for around two months against the euro and US dollar.
There all similarities end, however, as against the dollar it is well below the average for the last five years whereas against the euro it is well above.
This is a week which many UK mortgage holders had been fearing. Current betting for the interest rate decision from the Bank of England (BoE) on Thursday is for a 75 basis point rise, but at the height of the mini-Budget debacle there were worries it would need to be much higher, perhaps twice that size.
On Friday we saw the power that interest rates can have on currencies, as a relatively minor data release in the US appears to have sent the dollar tumbling. America’s PCE measure of inflation was less than expected, and this being a favoured measure of US Federal Reserve interest rate setters, the markets decided that interest rate rises over there might slow, and so bought sterling and other currencies instead.
The week of a decision by the BoE’s Monetary Policy Committee can be chaotic for currencies, so do call your trader on 020 8108 5163 to lock in today’s excellent rate if you have a trade upcoming, especially in the eurozone.
Before that, this week we have housing data today, with mortgage lending at 10.30am (how many borrowers scrambled to lock in their rate before this week’s MPC decision?) and Nationwide house prices this afternoon.
