The markets have been much quieter than late this week with little data coming out this week to swing GBPEURO levels one way or another. The Pound however still remains under pressure with post Brexit reactions being monitored carefully by the markets as such GBP is struggling to breach the 1.16 mark, the Euro has benefited from rising inflation keeping these levels firmly in check.
Though not all is well with the Euro zone as Italy’s Banks continue to be a headache for finance ministers with news of debt issues failing to be resolved quickly. There is little in the way of opportunity for Euro buyers at the moment and any potential spikes should be acted on quickly. One such spike may occur if the ECB decides to implement further Quantitative easing to boost its economy, this could provide Euro weakness in the short term in turn helping the Pound briefly breach the 1.16 level.
In other news the South African Rand has plunged in this mornings opening market bell as political turmoil engulfs the countries finance minister over espionage charges with the minister being asked in for questioning by the countries Hawks police unit. This in turn has provided an opportunity for those with Rand to buy a better rate of exchange.
My outlook for the rest of this week will probably see the GBPEURO hover around the 1.16/1.17 rate (Inter bank rate) with a possible downslide Friday as the spotlight falls back on the negative consequences of Brexit for the Pound.
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The Pound saw another big drop against most major currencies at close of of markets on Friday afternoon as traders moved there money in to more appealing and more importantly stable currencies. This saw the Pound drop to levels close to the lows following the Referendum vote.
Today is a fairly quiet date in terms of data as Europe takes a bank holiday (Assumption day). Though tomorrow is anything but quiet for the pound and may prove stormy for exchange rates as UK Inflation data is released at 10am GMT along with Price index data at 9.30am GMT.
Following the interest rate decision and poor manufacturing data I believe this data will have a negative effect on the Pound and will adversely affect currency pairings such as GBPEURO and GBPUSD pushing them lower.
The next big data release this week will be Thursday with Retail sales figures for July and Price index data for Europe following shortly after. Again I believe a slow down in retail is to be expected and may see further negativity for the pound. If however European Data comes in worse than expected the Pound may gain some lost ground and would present an opportunity for Euro buyers.
So in summary my weekly outlook would be for further Sterling negativity followed by a possible window to buy Euros on Thursday dependent on data. If you have a holiday in the next week or so it may be the time to act now to avoid further disappointment.
Should you have any questions concerning your holiday and currency requirements please email me at email@example.com and I will be more than happy to help.
Like the British weather the Pound has seen a fair few ups and downs recently partially recovering some of the ground lost to the Brexit vote and then losing it again on the likes of Purchase Index Data release and poor manufacturing data. I believe this is just the beginning of a tug of war as data releases play against Brexit expectations, which are proving difficult to predict accurately.
The big news this week will be the Bank of England’s Interest rate decision on Thursday. Should they choose to cut the rate to 0.25 expect a drop in the Pounds value against most major currencies especially the Euro and US Dollar. At the same time if Mark Carney and his committee introduce a fresh round of Quantitative easing this will see further downward pressure on the Pound.
Now with both of these things to consider and further Brexit shocks down the road in the short term I feel the Pound is unlikely to gain in strength and could see GBPEURO levels dropping into the low teens.
Considering this if you have a holiday requirement in the next week I would be looking to act before Thursday.