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Market Update

• Posted by currencies in Bank of England, Currency, Dollar, EUR, Fed, GBP, Inflation, Prime Minister, Rate Hikes, Sterling, UK, Uncategorised
• September 25, 2023
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Sterling weakness has been the main theme of September so far, and last week we saw these moves accelerated after the Bank of England decided to keep interest rates on hold and going against market expectations. Inflation has been cooling slightly (For now), however, we are still seeing weak retail sales and weak PMI data which are pointing towards the economy contracting over the coming months- in light of this data, it wouldn’t make sense for the BoE to raise rates as the general public would not be able to afford it. Following these releases the Pound to Euro rate is now below 1.15 and the Pound to Dollar exchange rate is trading at 1.22.

This week there isn’t a heap of data out as it is the last week of the month and quarter but for those very reasons, we can potentially see a lot of volatility throughout the week. The main releases are U.S GDP out on Thursday and European consumer confidence On Friday we have UK GDP data which is expected slightly higher than the previous, we also have European inflation data and U.S PCE Price index.

The trend currently is a weaker Sterling and Euro with a stronger Dollar- and currently, I would say the trend is your friend, if you have upcoming transactions and are concerned with current price movement then please don’t hesitate to contact me. The current inflation prediction is that it should continue to come down, however, I would pay attention to oil prices which have been rising and already showing in Canada’s inflation data- generally I would not assume the BoE are done with this current hiking cycle and it is still possible that we see another hike this year, unfortunately for Sterling rates, I feel we have seen the bulk of strength this year which is now providing good opportunities to those who are buying Sterling and have been waiting for better exchange rates.