Trade in the currency market was erratic over the past couple of weeks, amid shifting central bank interest rate cut speculation.
During this time, we’ve seen GBP/EUR hold around €1.18, while EUR/GBP retreated from £0.85 to £0.84.
Meanwhile, GBP/USD slipped from $1.32 to $1.31, while EUR/USD retreated from $1.11 to $1.10.
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Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…
What’s been happening?
Trade in the US dollar has been erratic over the past fortnight as mixed US economic releases saw USD investors repeatedly reprice their expectations for a Federal Reserve interest rate cut in September
The euro has also been infused with volatility, amid growing concern over Germany’s economic outlook, in addition to a cementing of bets for a European Central Bank (ECB) rate cut this month.
Meanwhile, expectations the Bank of England (BoE) will unwind its restrictive monetary policy at a slower pace than either the Fed or ECB has helped to underpin the pound over the past couple of weeks.
What do you need to look out for?
Looking ahead, the immediate focus will be the ECB’s latest interest rate decision. While a rate cut this month has been largely priced in by investors, dovish forward guidance from the bank could trigger an EUR selloff.
In the US, the latest consumer price index will set the tone going into the Fed’s September policy meeting. Could a weaker-than-expected US inflation print revive bets for a larger rate cut this month and sink the US dollar?
Finally, the pound looks well positioned to advance against both the euro and US dollar so long as upcoming UK data releases don’t dispel bets for BoE policy divergence with the Fed and ECB.
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