Will Sterling continue it's recent strength?

Last week was very busy in terms of data on the FX markets;

We started with a Bank of England interest rate and asset purchase facility decision, both remained unchanged, with the interest rate holding at record lows of 0.5% and QE at the level of £375 billion.

Shortly after we had the ECB rate decision followed by a Draghi led press conference. As expected by the consensus there was no change to the Central Bank’s record low benchmark rate of 0.25% even though the deflationary pressures continued to weigh on Draghi. Eurozone CPI is still way behind the ECB’s target; now currently at 0.7% and EUR/USD was fast approaching the $1.40 mark, a level which could trigger some alarm bells for ECB officials. Draghi substantially weakened the Euro in the press conference citing that “ECB officials are comfortable acting next time” before saying that “no new policy moves are imminent”. Draghi also said that there was “no decision today; rather a preview of next month’s meeting”. Leading markets to believe that some sort of monetary stimulus will be introduced at next month’s meeting.

Finally Fed Chair Janet Yellen testified again last weel; Yellen reiterated her dovish tone and didn't stray too far from her testament the day before. Also from the US we gained an insight into the labour market as US unemployment claims beat expectations dropping to 319k. A positive sign for the struggling US labour market.

Over the next 5 days; The most important data releases to watch out for will be The German ZEW survey on Tuesday, which is forecasting massive strength, and with Germany being Europe's largest economy, this can always push the EUR strength.

On Wednesday we see UK's employment & unemployment figures releases, these are both also expected in strong, however if there is any change in this, then we will see a market move; alongside BoE's inflation report, which will give us a better idea of any interest rate decisions in the future, as you probably already know, there is a direct relationship between interest rates and inflation.

On Thursday we see GDP figures released from France & Germany, alongside Eurozone GDP and Consumer Price Index data, now with all of these expected in strong, it may be wise for Euro buyers to have their Euros purchased before Thursday as this may strengthen the Euro if this data comes in on par with forecasts.

As you can see already this week is set to be packed with market moves, and with the current volatility on the markets it may be wise to start looking at what time's will be best to purchase your currency, if you require particular analysis on your currency pairs please contact me directly at prem.raja@currencies4you.com