3 exchange rate moving developments to watch out for this week – UK inflation report, FOMC policy announcement, Greek developments
That being said, the British asset was able to advance on both of its major peers after UK industrial production and GDP data impressed. Demand for the euro, meanwhile, was undermined by a frustrating lack of progress in the Greek bailout negotiations.
Currency market volatility is likely to be higher in the week ahead given the stream of interesting reports scheduled for publication. Both the GBP/EUR and GBP/USD exchange rates may experience extreme shifts.
Here are the week’s three main exchange rate-moving events:
UK consumer price index
There are a number of high-profile UK reports scheduled for publication in the coming week, including the nation’s retail sales and employment figures. The jobs figures will be of note as a sturdy employment gain would be pound-supportive. However, the UK ecostat with the most potential to initiate pound sterling exchange rate volatility is the UK’s consumer price index. An uptick in inflation will bolster Bank of England (BoE) interest rate hike expectations and give the pound a boost. Conversely, a slide back towards or below zero percent inflation might see sterling give up some of its recent gains. With such influential data scheduled for release, it’s worth staying on top of the latest developments.
FOMC policy announcement
Recently, several high-profile institutions have attempted to put the Federal Reserve off hiking interest rates in 2015. However, the latest non-farm payrolls report printed strongly and encouraged some industry experts to bet that a rate adjustment could take place as early as September. If the Federal Open Market Committee (FOMC) adopts a hawkish tone and stokes this speculation, we could see the ‘Greenback’ rally across the board over the second half of the week. That being said, the direction taken by the USD will also depend on the US inflation and industrial production reports.
For yet another week, the negotiations between Greece and its creditors will continue to drive demand for the euro. So far, the nation has been scraping by thanks to continually extended deadlines – but its creditors are rapidly running out of patience while Greece swiftly runs out of funds. Something has to give, but whether it is Greece conceding ground or its creditors remains to be seen. Should the nation manage to broker some sort of workable accord, and secure the release of desperately needed bailout funds, the euro could climb next week. However, if that fails to occur, Greece is likely to default on its 30 June repayment to the International Monetary Fund (IMF) and a Grexit could be hot on its heels.
If you’ve got a euro currency transfer coming up and are worried about potential market shifts, you may want to talk through your options with a currency specialist.
Contributed by TorFX
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