The pound sterling to euro (GBP/EUR) exchange rate surged to a new seven-year high of 1.4358 and the pound sterling to US dollar (GBP/USD) exchange rate trended at around the 1.56 level as the policy outlooks of the Fed and BoE converge.
The pound also managed to achieve multi-year highs against peers like the Australian, New Zealand and Canadian dollars due to global economic developments.
These are the three main currency market-moving events of the week ahead:
BoE policy meeting minutes
Earlier this week the pound was able to gain on peers like the US dollar, Euro and Australian dollar as both Bank of England (BoE) Governor Mark Carney and policymaker David Miles implied that interest rates are likely to rise at the beginning of next year.
Although inflation is currently at zero percent and the headline UK unemployment rate rose for the first time in two years in the three months through May, industry experts believe Britain’s economy is strong enough to withstand interest rate adjustments in the near future.
These recent comments have been enough to spark speculation that the minutes from the last BoE interest rate announcement will show that the Monetary Policy Committee (MPC) was split on the subject of borrowing costs.
If the minutes, due for publication on Wednesday, do confirm that one or more members of the MPC voted for an immediate rate increase, the pound sterling exchange rate could advance across the board.
Recent events have shown how volatile exchange rates can be. Look into registering for regular market updates if you want to stay up-to-date with the latest market movements.
RBNZ interest rate announcement
A dire dairy auction and mixed economic reports for New Zealand have left economists betting that the Reserve Bank of New Zealand (RBNZ) will cut interest rates after the week’s policy meeting.
This speculation, coupled with developments in the UK, drove the GBP/NZD exchange rate to a new over five-year high of 2.3999 – and further gains could be on the horizon.
If the central bank follows the example set by the Bank of Canada (BOC) this week and cuts interest rates in order to bolster the domestic economic outlook, the New Zealand Dollar is likely to plummet across the board.
Eurozone consumer confidence
Although the situation in Greece remains highly unsettled, the Greek Parliament have now accepted the bailout proposals put forward by creditors. Baring any major opposition from the Eurozone’s most influential economy, Germany, we could see some stability return to the nation.
If that proves to be the case, ecostats from the currency bloc will start becoming more important. Of the data due for publication next week, the Eurozone’s Consumer Confidence index is probably the most influential.
Sentiment is forecast to have fallen from -5.6 to -6.4, a result which would be euro-negative.
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.