Sterling stabilises

After the Pound trickled lower towards the end of last week, we’ve seen stabilisation and perhaps a little recovery in the value of the pound this morning. The hoo-ha over the struggle to get abundant supplies of petrol and diesel to the pumps appears to have eased a little, although many stations are reporting a lack of fuel. A driver shortage is a factor across Europe but the added factor of Brexit has exacerbated the issue in the UK. The availability of more HGV tests for new drivers is a medium to a long-term solution but drafting in the military may be a short-term fix.

Either way, GBPUSD is still a little subdued at $1.3660 and GBPEUR is similarly flat at €1.1660 this morning.

Supply shortages hamper German recovery

We heard on Friday that the problems of supply shortages are impacting German businesses as well. The Ifo institute’s business climate index fell to 98.8 in September. That was below expectations but a ‘bottleneck’ situation in the supply chain is being blamed for the lack of optimism. That partly explains the lack of relative variation in the GBPEUR exchange rate. The EURUSD rate is a little more lively but that is also caught in a half-a-cent range just above $1.1700.

Speculation mounts of a NZ rate hike

The Pound has bounced a little against the Australasian Dollars this morning. However, there is a lot of speculation that the Reserve Bank of New Zealand will raise the official cash rate by half a percentage point when they meet on the 6th of October. That is supporting the New Zealand dollar. Hence the GBPNZD exchange rate has bounced by less than half a cent this morning to NZD 1.9480. Whilst the GBPAUD rate is up a similar amount to AUD 1.8780, we will see Australia’s retail sales data overnight tonight. That is forecast to be poor once again, so weakness in the AUD can’t be ruled out.

Central bankers everywhere

There is a notable lack of hard data to digest today but we have a veritable smorgasbord of central bankers speaking throughout the day. The highlights will be ECB President Lagarde and BOE Governor Bailey but there are Federal Reserve speakers and a speech from another ECB member, Fabio Panetta. The Federal Reserve Chairman testifies to congress this week, so that will overshadow anything said by other Fed members.

There is US data today though. The durable goods orders data should show growth, so, if anything is likely to be volatile today, it is the US Dollar.

Sterling traders will be prepping for the release of Q2 GDP data on Thursday. Any variation from previous data will be seized upon.

All in all, it will be a lively end to September. Thursday will be the end of the Month and the Quarter, so watch out for unexplained volatility as traders close their books for that. Then we can kick October off with a big TGIF. Have a great week.

Oh, and does anyone want to swap a gallon of diesel for 100 loo rolls? We’re talking good quality Andrex 2-ply, none of that ‘own brand’ stuff. I still have a few leftovers from the last binge buying session around covid.

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