On Friday we saw Sterling rise against the Euro above 1.20 following positive retail sales data, giving us the best GBPEUR exchange rate in over 2 years. Retail sales were expected negative, but thanks to good weather and more money in peoples pockets, spending picked up in the Summer giving Sterling a good reason to blow past the 1.20 level against the Euro.
These retail sales figures also lead us to believe that there is ample demand in the British economy, meaning that inflation could go backup again in the Autumn, which is in line with my thinking.
This week is a relatively low priority one from a data perspective, with no high priority releases all week. on these days the focus will be more on any broad economic news and geopolitics, there was some escalations in the Middle East last week so we will be keeping an eye on this area to see if there are any developments which could be market moving. Also any news in regards to the U.S election will be important, with Trump ahead in the polls, were seeing a bid on the US Dollar, any change in this and we could see a shift in the U.S Dollar, predominantly against the Euro and Sterling.
Through the next few weeks the main events are now the UK Budget (30th Oct), U.S Presidential Election (Nov 5th), BoE interest rate decision (Nov 7th) and Fed interest rate decision (November 6th). This will be a very volatile period for Sterling and the U.S Dollar, which will cause a lot of volatility with GBPEUR, GBPUSD, EURUSD predominately, if you have targets you are looking at on these pairs please don’t hesitate to contact me to discuss a strategy, as once the election is done, there will be decisive moves on the U.S Dollar in either direction.
