3 exchange rate moving developments to watch out for this week

The previous week was fairly quiet data-wise, with little of import scheduled for release from the UK, Eurozone or US. Subsequently, GBP, EUR, USD currency market movement was restricted, although the Bank of England’s (BoE) policy meeting minutes sparked modest fluctuations before the weekend.

In the minutes, the BoE acknowledged the recent turmoil in China but indicated that it doesn’t feel, at present, that the situation is likely to have a notable impact on domestic fiscal policy.

These reassuring words put a rate hike taking place at the turn of the year back on the table. This is following the run of concerning UK Manufacturing, Construction and Services PMIs knocked it off two weeks ago.

The GBP/USD exchange rate began the week trending in the region of a four-month low but has since returned to trending above 1.54.

Meanwhile, the GBP/EUR currency pair, which fell to a low of 1.35 last week, briefly advanced above 1.38 ahead of the publication of final estimate inflation figures for Germany.

So, what should we be looking out for next week?

UK inflation data set to drive pound sterling (GBP) exchange rate trading

The BoE is only likely to adjust borrowing costs at the beginning of 2016 if price pressures pick up in the UK. Therefore the nation’s inflation figures will be of even greater interest than usual in the months ahead.

If on 15 September, the UK Consumer Price Index for August prints higher than the 0.1 percent year-on-year figure recorded in July, it would give the pound a boost against peers like the euro and US dollar.

There are a couple of other UK reports worth attending to next week, most notably Britain’s employment change and average earnings figures. A strong jobs gain or solid increase in average earnings would bolster BoE rate hike expectations and could spark a sterling uptrend.

Exchange rates can be extremely volatile. Look into registering for regular market updates if you want to stay up-to-date with the latest market movements.

Euro (EUR) exchange rate responsive to ZEW sentiment reports  

As the European Central Bank (ECB) recently hinted that the quantitative easing programme could be expanded to bolster the Eurozone’s economic outlook, any reports from the currency bloc which indicate that it is flagging will weigh on the euro.

Of the number of Eurocentric ecostats scheduled for publication in the coming week, the ZEW Economic Sentiment Surveys for Germany and the Eurozone are perhaps the most influential.

Declining sentiment would not bode well for the Euro and could see the common currency tumble.

FOMC decision looms: Will US Dollar (USD) conversion rate jump on higher rates?

Speculation about whether or not the Federal Open Market Committee (FOMC) will increase interest rates at its September gathering has been a dominant force behind USD exchange rate movement for months but the Fed’s policy gathering is now just a few days away.

If the FOMC goes against the general market consensus and raises interest rates, the US dollar is likely to surge across the board in response.

However, should the Fed make reference to China’s economic slowdown and insinuate that global headwinds are likely to prevent a rate adjustment until either the end of this year or the beginning of next, the ‘Greenback’ will probably fall.

Exchange rate movements can be swift and dramatic, so if you’ve got a currency requirement coming up and want to move your funds at the right time you may want to have a chat with a currency specialist.

Contributed by TorFX

TorFX is a specialist currency broker that offers far better exchange rates than you are likely to receive from a high street bank.