3 exchange rate moving developments to watch out for this week – Eurogroup meeting, UK inflation data, US consumer price index
However, over the course of the week, the GBP/EUR exchange rate fell from a high of 1.4163 to a low of 1.3856.
The GBP/USD exchange rate also came under pressure with chaos in the Chinese stock market and sliding commodity prices generating a risk-off environment and bolstering the Greenback’s appeal. ‘Cable’ moved from a high of 1.5637 to a low of 1.5332 before recovering a little ground following the publication of dovish FOMC policy meeting minutes.
We can expect further notable exchange rate shifts over the next five days.
These are the three main currency market-moving events of the week ahead:
The Greek referendum resulted in over 60 percent of the population voting against austerity measures. Greek PM Alexis Tsipras claimed the result would give him greater negotiating power with creditors, but as the nation really is in a dire situation, some sort of compromise needs to be made before the country can be granted aid.
Consequently, Greece was given until Thursday to present a workable reform proposal, with the intention that a bailout programme would be finalised during an emergency gathering of Eurogroup officials on Sunday. However, since then various industry experts have expressed concern that a viable solution won’t be found, with a number betting that a Grexit is still likely to occur. Since Syriza came to power at the beginning of the year, a number of supposedly crucial Greek deadlines have come and gone. However, this really could be crunch time for the nation and euro volatility is expected.
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.
UK inflation data/ employment report
While the Bank of England (BoE) is likely to pursue a policy of maintaining record low interest rates for some time to come given the current geopolitical climate, the central bank might be tempted to reconsider this stance if UK data points at an improving (and more balanced) domestic economic recovery.
For that reason, investors will be paying close attention to the week’s major UK reports – employment and inflation data.
Accelerating inflation and falling unemployment would be pound-supportive, but slowing consumer price gains or falling average earnings would weigh on the GBP/EUR, GBP/USD currency pairings.
US consumer price index
The minutes from the last Federal Open Market Committee (FOMC) policy meeting indicated that the central bank is too concerned about developments in Europe and China to risk imposing higher borrowing costs at the moment.
However, the fact that any revisions to interest rates will also be data dependent remains, so a run of encouraging US figures may just put a September rate adjustment back on the table. If US inflation moves further toward the Federal Reserve’s target levels, the US dollar may resume its bullish run against its main currency counterparts.
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.