The pound hit a two-week high against the euro late last week. It is currently 1% stronger than the average of the past year and 3% above the average of the past five years.
GBP/USD is at or close to its strongest for two months.
Worth locking in for the year ahead (or longer)? With a busy week for data there is certainly no guarantee of these rates sticking around.
Coming up on Wednesday is the inflation figure for the UK. There are high expectations of a big drop close to the 2% target level for the Bank of England (BoE), from last month’s 3.2%. But high expectations not being met are when exchange rates get volatile. Also, watch out for the “core” inflation level on Wednesday, as this is the underlying trend.
Inflation isn’t the only game in town this week. Before then we will hear from two senior members of the BoE’s Monetary Policy Committee, and their carefully parsed words can certainly move the markets.
As can PMI, the purchasing manager’s index, which comes out for major economies including the UK on Thursday. For PMI, a number below 50 indicates pessimism among business leaders while above 50 shows optimism in the sector. The story so far… there’s been strong optimism (PMI of around 55) in the UK services sector lately, and that is the UK’s most important sector. In Germany’s biggest sector, manufacturing, on the other hand, PMI been well down at around 42.5. Will that continue, or start to be reversed?
Then to finish up the week, two measures of the public’s economic confidence, with the GfK Consumer Confidence reading and UK retail sales. On neither count, it has to be said, are the analysts predicting a great performance.
So, plenty for the markets to chew on, but you can simply bypass all that noise and hot air and lock in your rate for the year ahead, to focus on your own plans abroad. Just give your account manager a call on 020 8108 5163.
