France
5 August 2024
Weekly Market Headlines:
- Sterling hits lowest level since May against the Euro: The recent interest rate cut by the Bank of England has led to a significant drop in sterling against the Euro, which has fallen over 2% from July’s highs. Markets are grappling with the uncertainty of future rate cuts and the GBPEUR rate remains highly volatile.
- Commodity-based currencies under pressure: Conversely, the pound has gained against the Aussie dollar, New Zealand dollar, Norwegian Krone, and South African Rand. These commodity-based economies and currencies often struggle during periods of global trade and market uncertainty. Notably, GBPAUD is trading at a one-year high.
- Increased global uncertainty following disappointing US jobs data: Hiring in the US slowed abruptly last month, prompting talk in markets of ‘policy mistakes’ by the Fed, with fears of a US recession intensifying. The possibility of a 0.5% rate cut in September, rather than the anticipated 0.25%, has spurred a significant sell-off in stock markets and commodity-linked currencies, while benefiting safe-haven assets.
In Depth: This Week’s Market Update
Sterling hits lowest level since May against the Euro: The recent interest rate cut by the Bank of England has led to a significant drop in sterling, which has fallen over 2% against the Euro from July’s highs. This means if you are planning to buy Euros, it will cost you more now than it did a few months ago. Lumon’s currency exchange services can help you lock in rates and protect against further declines.
Increased global uncertainty following disappointing US jobs data: A much lower than expected US Non-Farm Payroll report has heightened expectations for further US interest rate cuts. This increases the likelihood of a US recession, potentially impacting investments and savings. Lumon’s market insights and risk management strategies can help you stay informed and make safer financial decisions.
FX markets react to global interest rate changes: As central banks worldwide implement long-anticipated interest rate cuts, we are witnessing heightened potential for volatility in the FX markets. This means the value of currencies can fluctuate widely, affecting international transactions and travel costs. Lumon offers tools to monitor these changes and secure favourable rates for your currency needs.
Impact on sterling and global trade currencies: The Bank of England’s finely balanced decision last week has left markets uncertain about future rate cuts, leading to losses for the pound. If you have international business dealings, this could increase your costs. Lumon’s forward contracts can help you fix exchange rates in advance, protecting your business from adverse movements.
Strength in safe haven currencies: Currencies favoured in times of uncertainty, including the US dollar, Japanese Yen, and Swiss Franc, have strengthened. If you hold investments in these currencies, their value may have increased. Lumon’s expert advice can help you capitalize on these gains and manage your international investments more effectively.
Commodity-based currencies under pressure: Conversely, the pound has gained against the Aussie dollar, New Zealand dollar, Norwegian Krone, and South African Rand. If you are planning to travel to or trade with these countries, your money will go further. Lumon’s tailored exchange solutions can help you take advantage of these favourable rates.
Strategic response with Lumon: This volatility underscores the rapid shifts in FX market sentiment and the crucial need for a robust risk management strategy. To protect your gains and limit losses amidst market changes, consider consulting with Lumon’s dedicated team. We provide the latest news, forecasts, and developments to ensure your currency transfers are cost-effective and secure.
Take proactive steps to navigate these turbulent times—reach out to Lumon today for expert advice and tailored solutions.
What events might move exchange rates this week?
GBP
- Wednesday: UK House Prices
USD
- Monday: US Services PMI
- Thursday: US Jobless Claims
EUR
- Tuesday: Eurozone Retail Sales
AUD
- Tuesday: Australian Interest Rate Decision
