The British pound has started this week with a renewed demand, pushing up to multiple daily and weekly highs against EUR, which some market analysts are forecasting could last for the coming days. GBP spiked up to 1.1750 against EUR early in the afternoon session, the highest seen in nearly 4 weeks.
Growing signs for the UK to report strong economic growth in the third quarter is bolstering expectations for the Bank of England to raise interest rates prior to the EU central bank or Federal Reserve. Since the synchronised lowering of interest rates in response to the Covid-19 economic fall-out, the ‘race to raise’ has been a hot point of focus amongst economists and market analysts. It is to be expected that the currency of the first country to ‘raise’ will receive a boost in strength against the other major currencies with a return of purchasing appetite across the market.
Yesterday’s economic data release was limited to say the least with the majority of volatility as a result of headline news and running market commentary. Looking into today, the UK will release their quarterly unemployment figures in the morning which is expected to be remain unchanged. United States CPI data will be released in the afternoon which will give a ground level reading of inflation in the US. Analysts are expecting the monthly figure to remain as it was in August, with a forecasted growth of 0.3%. Any wildly unexpected figure above the 0.3% mark could provide support for an earlier Federal Reserve interest rate hike and throw some shade on the GBP support seen yesterday.
Have a good day.
James Camp, Senior Relationship Manager.
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