ChamberFX Weekly Brief
Keep up-to-date on foreign exchange developments and news with our brand new ChamberFX weekly briefs. These valuable weekly insights are provided by Andy Dobson and Damon Ellam, International Payments UK, MoneyCorp. Andy and Damon are our regional representatives and will be providing useful monthly FX forecasts to help chamber members with their currency strategies.
Good morning,
Welcome to my monthly newsletter for November, a belated Halloween special, we have certainly seen events that have spooked markets recently and there’s irons in the fire for the week ahead!
October Recap
- Dollar Strength: The consistent rise in the Dollar is notable, driven by strong US macro-economic data and growing expectations of a Trump victory in the upcoming election.
- ECB Rate Cut: The European Central Bank’s decision to cut rates by 0.25% and the possibility of further cuts in December, albeit with inflation accelerating in the Eurozone points towards a more cautious approach from the ECB than previously expected.
- GBP Themes:
- UK Inflation: The drop below 2% to 1.7% increases the likelihood of a rate cut by the Bank of England at Thursday’s meeting.
- Labour’s Budget: Rachel Reeves’ budget and the subsequent market reactions highlight concerns over economic growth and increased borrowing causing a selloff in GBP, UK Bonds and Stocks.
On Thursday, GBP hit twelve-week lows against the Dollar and Six-week lows against the Euro.
However, with a mixture of news coming out from the US and Eurozone, this dilutes the situation and makes it more difficult to single out the UK budget effect on the pound’s performance.
November Outlook
- US Presidential Election: The close race between Kamala Harris and Donald Trump is a major event, with potential implications for USD strength or weakness depending on the outcome.
In the context of a Trump Victory, his economic policies, including trade tariffs, are expected to drive inflation higher. This scenario could influence the Federal Reserve’s decisions on interest rate cuts, and we will likely see USD strength.
A Harris victory is expected to bring policy continuity from the Biden administration and is generally seen as less disruptive to markets; we will likely see USD weakness.
- Interest Rate Decisions: Both the Bank of England and the Federal Reserve are expected to cut rates by 0.25% on Thursday, with market reactions more likely influenced by the tone of their announcements for future policy.
- Economic Data: The clustering of key macroeconomic releases could lead to significant shifts in sentiment and exchange rates, particularly for GBP/USD, GBP/EUR & EUR/USD.
The expectations in the US have been cemented following a much weaker than expected payroll report on Friday, disrupted by hurricanes and worker strikes.
For GBP/USD and EUR/USD – we saw a 4.25% and 3.5% shift between the highs and lows in the month of October, the most volatile this year apart from August – so I think there’s an argument we could similar volatility this month.
Please note, this is my opinion and not financial advice. There are many other valuable and differing opinions available, so please consider them as well.
Let me know if you have any specific questions or needs as we navigate this uncertain period.
Have a great month ahead!
Damon."
Weekly FX Briefs
Contact
For further information and advice on Hull & Humber's ChamberFX, or for assistance with your currency strategy, please click here or contact Lorraine Holt at l.holt@hull-humber-chamber.co.uk or call 01482 324976.
Service delivered by Hull & Humber Chamber of Commerce in partnership with TTT Moneycorp Limited.
TTT Moneycorp Limited is authorised by the Financial Conduct Authority under the Payment Service Regulations 2017 (reference number 308919) for the provision of payment services.
