Sterling Update: 25-month high against Euro

Here’s the latest currency news from our partner Moneycorp, to help you find out what your money is worth.

GBP

Last week, sterling hit 30-month highs against the US dollar and 25-month highs against the Euro, as the Bank of England (BoE) voted 8-1 to hold the bank rate at 5.00%. BoE Governor Andrew Bailey justified the unchanged rate, stating that it is “vital that inflation stays low” and that the BoE needs to “be careful not to cut [rates] too fast or by too much.” This came a day after UK inflation was released at 2.2%, in line with forecasts.

While controlling inflation is crucial, with GDP coming in at 0.0% this month, the BoE are expected to remain vigilant not to stifle economic growth. Close attention will be on the BoE’s next meeting in November, where, at the time of writing, a 25-basis point rate cut is priced in at 115%. Last week also saw the release of UK retail sales data, which came in at 1.0% above the forecasted 0.3%. However, on monday 22nd, UK Manufacturing and Services PMI figures fell further than expected, to 51.5 and 52.8 respectively, compared to forecasts of 52.3 and 53.5.

EUR

Last week was relatively quiet for the Euro, with any volatility in EUR pairings being driven by GBP and USD movement. The only notable data-point was the German ZEW Economic Sentiment, which came in below forecasts, following the European Central Bank’s (ECB) decision to cut rates by 25-basis points, on September 12th.

This week, the Eurozone’s economic data calendar is slightly busier. Today (Monday), the Eurozone’s Flash Manufacturing and Services PMIs came in at 44.8 and 50.5 respectively, below the forecasted 45.7 and 52.3. French and German PMIs also missed expectations.

Looking ahead to the rest of the week, an indicator for Germany’s economic activity, the ifo Business Climate Index will be released on Tuesday, and ECB President Lagarde will speak at the European Systemic Risk Board Annual Conference in Frankfurt on Thursday.

Spanish Flash CPI YoY will be released on Friday and is expected to come in at 1.9%.