Excel Currencies Blog

The Pound experienced a slight wobble last week after BoE Governor Bailey explained to lawmakers that the top in interest rates was close, as the bank expect to see inflation fall sharply in the coming months. A major driver in the current inflation picture is wages and tomorrow we will learn whether or not wage increases are continuing to grow to support high inflation. 

A weaker reading will mean an overall lower inflation rate, but it will send Sterling lower too. A higher outcome will do the reverse. Wednesday's GDP number is obviously important too and there will be added volatility on the release here mainly if the forecast of modest growth has been missed. 

There are many variables at play this week on the market and whilst huge swings in rates are not expected, it's rather a 50-50 call on whether the Pound will finish higher or lower come the end of the week. We predict £-€ has a better chance of improving compared to £-$ in the days ahead..


EUR
Arguably the most important release this week comes from the ECB with their latest interest rate decision. Consensus is for no change in the rate, but as always, the future guidance is what will create the volatility if it's to come. Economically, the Euro-Zone is under pressure and the Euro remains out-of-favour from traders, so we are more negative in the Euros' chances of an increase this week. 


USD
There are plenty of key releases out of the US in the days ahead which means the Dollar could continue to dominate the market. The main one being the inflation figure on Wednesday. Both the core inflation and inflation rate is expected to fall by a fair number, further confirming the soft landing the US is achieving out of this hyper-inflationary cycle.