Sterling exchange rates have tumbled over the last two days but still remain relatively well supported, all things Brexit considered. A raft of gloomy reports yesterday helped see the pound fall lower over growth concerns in the car and construction sectors.
It is now looking very likely the Bank of England will cut interest rates by 0.25% next Thursday. This is neagtive for the pound. The markets would appear to have priced some of this outcome in although my view is that the pound may slide lower as we approach Thursday and after the event.
Mark Carney at the Bank of England had suggested there would be a “package of measures” so it will be interesting to see if there is any accompanying Quantitative Easing with this potential cut at this stage. Either way this all presents a risk and the pound should fall further next week.
For anyone selling Euros the Bank of England decision is potentially the market mover of next week. There could be some excellent opportunities to sell Euros and buy pounds.
EU Banking Stress Tests could see the Euro Weaken
This evening sees the European banking stress tests where high volatility is expected. There have been major issues with some of the Greek and Italian banks in particular with how much capital they hold. Some banks have also had to accept bailouts. The spotlight this evening will be over the Italian banks and one in particular Monte dei Paschi, the oldest bank in the world which is expected to have some issues. This would be bad news for Euro exchange rates.
The interesting thing is that this annoucement is made at 9pm tonight outside of trading hours. As such any poor results is likely to see a substantial but delayed market reaction on Monday morning. There could be some good opportunities for buying Euros at the start of next week.
If you have an upcoming GBP or EUR currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to compare our award winning exchange rates with your current provider, then please feel free to contact me on 0044 1494 787 478 and ask one of the team for James. Alternatively, I can be emailed directly on [email protected]