Importers from the continent cheer as GBP trades at its strongest level against the EUR in almost 6 years - time to hedge?
Thursday sees both the Bank of England and European Central Bank announce interest rate changes = good chance we will see some large currency swings.
Exporters sit on hands waiting (hoping) for better levels
Next week quiet on the economic calendar front
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The EURGBP rate has been relatively quiet, as expected, into the lead up of "Super Thursday". The day coined it's name from the significance of both the Bank of England and European Central Bank announcements coinciding on the same day. We have come from a long period of low interest rates, and in the wake of rising inflation, central banks are having to step up use their monetary policy tools. These interest rate changes, and the expectations of futures changes, impact currencies directly.
The question is - are we going to go back to levels seen in the middle of last year (0.92) or will the GBP continue to strengthen and go to levels last seen in 2016 (<0.8250)? We are at quite an inflection point. It is therefore not surprising that we have seen a relatively stable exchange rate the past few days, coupled with the outcome of interest rate decisions which are a coin toss at best.
If you are worried about currency swings going into Thursday please get in touch. We can look at some hedging options suitable to your specific needs.
Like the GBP, the USD also started the year on the front foot. Currently traded at 1.3507, similar levels to where we saw the pair open trading at the beginning of the year.
On Friday we have non-farm payrolls coming out of the US . Occurring on the first Friday of every month, this is an important print in the economic calendar, as it has far reaching impacts across regions and asset classes. Ahead of this we also have the Bank of England announcing its interest rate decision on Thursday.
The GBPUSD pair is trading relatively in no-man's land, with eyes on 1.42 to the upside and 1.32 on the downside.
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