22 March 2023
Staying on top of the latest currency news can help you time your transfers more effectively, so find out what you should be looking out for over the next couple of weeks…
A crisis in the banking sector infused considerable volatility into the currency market over the past couple of weeks.
Over this period GBP/EUR climbed from 1.13 to 1.14, while EUR/GBP slid from 0.88 to 0.87.
At the same time, GBP/USD traded between 1.18 and 1.22, and EUR/USD 1.07 fluctuated between 1.05 and 1.07.
The recent malaise in the banking sector was initially triggered by the collapse of Silicon Valley Bank (SVB). The bank’s failure weighted on the US dollar in the past couple of weeks as it prompted USD investors to rein in their Federal Reserve interest rate expectations.
The euro then came under considerable pressure as a subsequent plunge in shares in Credit Suisse triggered a wider European bank selloff. This also resulted in the European Central Bank (ECB) adopting a more cautious tone following its latest interest rate hike.
Meanwhile, the weakness of its rivals has helped to prop up the pound over the past fortnight. However Sterling’s gains have been tempered by domestic headwinds, including speculation the end of the Bank of England’s (BoE) rate hike cycle is imminent.
Amid ongoing uncertainty regarding the banking sector, the currency market may remain highly volatile in the coming weeks.
This may see the resulting market jitters disproportionately benefit the safe-haven US dollar and pile more pressure on the euro.
On top of this we have the latest interest rate decisions from the Fed and BoE. If either central bank opts to leave interest rates on hold, their respective currency could plummet.
At Currencies Direct we’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.
Since 1996 we’ve helped more than 325,000 customers with their currency transfers, just pop into your local Currencies Direct branch or give us a call to find out more.
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