Sterling rises from 2 week low

Alistair Ryan Currency Broker - Sterling rises from 2 week lowWritten by
Alistair Ryan

Currency Broker
T: +44 (0)1442 892 061

Sterling managed to gain some ground back against both euro and US dollar yesterday after dropping to a 2 week low against each of them in the previous couple of days.

GBP/EUR rates moved up to a day high of 1.2945 and GBP/USD hit 1.4470.

GBP/EUR exchange rate graph

GBP/EUR exchange rate graph

GBP/USD exchange rate graph

GBP/USD exchange rate graph

This movement came after Mario Draghi, president of the European Central Bank (ECB), gave a speech and stated that the bank had only made marginal upward adjustments to its inflation projections. It seems that the markets perceived these predictions as rather dovish and the euro lost ground against its major counterparts.

Draghi raised the inflation forecast for 2016 to 0.2% from the previously predicted 0.1%. He also kept the projections for 2017 and 2018 at the same levels they were previously, 1.3% and 1.6% respectively. Whilst the forecast to reach 1.6% in two years’ time is a fairly major rise in inflation this is still short of their 2% target and was seen as a negative for the single currency.

Opinion Polls

Sterling crosses themselves will still be dominated by opinion polls on the upcoming EU referendum. This was shown earlier in the week when the markets had a minimal reaction to Manufacturing PMI data out of the UK, which in normal circumstances we would have expected to affect GBP rates. Sterling’s recent bout of strength has come off the back of nearly every opinion poll putting the ‘remain’ campaign as a clear front runner to win the referendum, but this has changed this week and with it so has Sterlings surge against its counterparts.

On Wednesday YouGov conducted a poll that put the ‘remain’ and ‘leave’ campaigns neck and neck, following on from 2 separate polls on Tuesday, one online and one telephone poll, which both put the ‘leave’ campaign out in front. With the polls being the only insight we can get on how people will be voting each one, no matter the result, will have an effect on the currency markets and with an abundance of different polls being released almost daily we are in for a very rocky time.

Get in touch

Here at the Foremost Currency Group we can act as your eyes and ears on the markets to help you find the opportune timing to make the most of your currency. We have a number of different contract options to help safeguard your funds against adverse market movements. One of these being a Forward Contract whereby you can lock in an exchange rate for a future settlement date by simply placing a small margin against the trade.

If you would like to speak with one of our professional, knowledgeable currency specialists please get in touch for a free, no obligation consultation.

Today’s Data Releases

A quiet day in the UK today with Markit Services PMI figures the only release of the day. There is expected to be a slight increase on last month’s figures but any deviation from the expected could affect GBP crosses.

Over in the Eurozone we have a host of nations releasing their Markit Services PMI and the Eurozone as a whole releasing their Services data. This will be followed by Retail Sales figures from the Eurozone. All of these have the potential to move the markets.

It could be a busy afternoon across the pond in the US. They will be releasing their Unemployment Rate, Trade Balance Figures and Non-Farm Payroll numbers at 1:30pm. These are all major releases but the seemingly impossible to predict Non-Farm Payroll numbers tend to be the most volatile release of the month. These will also be followed by Services and Non-Manufacturing PMI figures plus Factory Orders.

Alistair Ryan
Currency Broker
+44 (0) 1442 892060