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Sterling running out of steam?

20th September 2017 Market Update

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🇬🇧 GBP – The pound has struggled to continue its good run of late after last week’s positive inflation figure and Bank of England announcement. With no real substantial data of note out so far, the pound has lost slight ground against both the euro and US dollar, on what looks like profit taking by the markets.

Today we have retail sales out at 9:30am, which are expected to come in worse than previous at 0.2%, which could cause Sterling to continues the decline we’ve seen this week.

🇪🇺 EUR – There has also been little in way of significant data out for the euro so far this week. German producer price inflation has come out this morning better than forecast at 0.2%. However there has been limited impact on the euro.

🇺🇸 USD – Despite GBP/USD retreating slightly this week we currently sit just below 52-week highs on the currency pair.

Today we have the FOMC interest rate decision and press conference, no change is expected but the press conference could cause some volatility. Analysts are expecting the Fed to take the move to start unwinding its stimulus programme. Should this be the case then we could see GBP/USD drop as investors pile in to the US dollar. We also have US existing home sales which are expected to come slightly higher than previous.

 

Key Announcements

🇬🇧 GBP
09:30am – Retail Sales.

🇺🇸 USD
15:00pm – Existing home sales.
19:00pm – Fed Interest Rate Decision.
19:30pm – FOMC Press Conference.

 

Our View: Whilst immediate attention will be on UK retail sales this morning, key focus for the markets will be the Feds announcement this evening. Whilst US interest rates are expected to stay the same, the subsequent press conference could cause some volatility if indeed the Fed hint at unwinding its stimulus programme. Should this be the case then we could see GBP/USD drop off from the highs that we are at now.

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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