The pound recovered strongly against the US dollar at the end of last week, and a little against the euro.
The reason for GBP/USD to gain 2% in one day, to a six-year high, was the latest economic data from the US on Friday. Unemployment in America went up and business confidence fell.
Against the euro, sterling moved to a two-week high, powered partly by the Bank of England (BoE) holding out the possibility of further interest rate rises.
What could happen this week to move the markets? There doesn’t look to be anything especially game-changing until Friday, with Gross Domestic Product (GDP), when we will learn if the UK is sliding into a recession after all those interest rate rises. One of the BoE’s interest rate setters was warning recently that only around a quarter of the economic effects of the rise to the highest borrowing costs for 15 years have so far been felt, so we will get more sense on Friday if they have done enough to cool the economy.
In the meantime there are plenty of smaller indicators. Today we will hear about new car sales, tomorrow house prices and the level of mortgage borrowing and on Wednesday hopes for the housing market from surveyors.
It will all build a picture of what the Bank should be doing next, and your exchange rate could well move as a result.
So, if you are committed to a large international transaction, by next week the pound may well not be at a six-week high any longer.
Do give your trader a call on 020 8108 5163 to discuss fixing your exchange rate with a forward contract.
One other thing to mention, at the end of this week, on Saturday Smart Currency is sponsoring the Your Overseas Home Virtual Event. It’s a one-stop shop, all online, for anyone buying a property in Spain, France, Italy, Portugal, Greece or Cyprus, with property buying experts like us, but also estate agents, property and emigration lawyers, removal firms, and health insurers and IFAs for those retiring abroad too. You can get your e-ticket here, and it’s all free!
