The British Pound plunged against most of its counterparts last week, shedding over 1% against the Euro and the U.S. Dollar, following remarks from BoE Governor Andrew Bailey that significantly dampened investor enthusiasm. Looking forward, a scarcity of UK data releases may leave GBP exchange rates susceptible to movements based on an upcoming speech from BoE member Huw Pill. If Pill’s remarks align with those made by Governor Bailey last Thursday, Sterling could continue to struggle and potentially end the week slipping against its counterparts.
The Euro stumbled out of the gate last week, following the publication of weaker than expected German and Eurozone inflation figures. In fact, the underwhelming inflation prints saw the Euro slide to a 29-month low against the British Pound as it stoked bets for another ECB interest rate cut later this month. Moreover, the bloc’s single currency remains under pressure as ECB Vice-President Luis de Guindos warned of potential downside risks to the Eurozone economy.
The U.S. Dollar moved little in European trade this morning after logging strong gains last week, especially following Friday’s payrolls data. The reading quashed fears of a U.S. economic slowdown and furthered the notion that the Fed will not need to cut rates sharply to support the economy. Investors were seen largely wiping out bets on another 50-basis point cut in November and were pricing in an over 90% chance of a 25-basis point cut.
Overall, the interplay between central bank policies and economic data continues to drive volatility in the currency markets, making upcoming speeches and reports crucial for future movements.
This gain shows the importance of getting proper currency exchange advice as getting a forward contract can save thousands when compared to instant exchange services such as Wise etc. This is especially important when dealing with larger amounts, for instance a property purchase, a small change in rate can have a big impact on your costs
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