Will Sterling rise or fall in September?

Vital month ahead for pound sterling exchange rates

The pound has started the month of September in a buoyant mood. Sterling is back over 1.17 against the Euro, presenting some of the better times of the last year buying GBPEUR.

Clients interested in the US dollar and sterling might note the pound is weaker against the greenback. GBPUSD has been back in the 1.25s, which really takes us back to some of the lowest since June.

This is all the result of a shift in EURUSD exchange rates, where the Euro is weaker against a stronger US dollar.

So, the pound is stronger against a weaker Euro but weaker against a stronger dollar.

What will move GBPEUR and GBPUSD in September?

It is tempting to look at the pound when trying to answer the question above. Of course, how the pound performs is very relevant to its direction.

But, in this global world we live in, it is important to look at other factors. As we can see from my first two paragraphs, the movement on EURUSD is actually having more of a bearing on the shorter term trends.

The US dollar accounts for 60% of globally traded FX, whilst the Euro accounts for around 20%. Our dear sterling is 5%, so we can see how the US dollar (and Euro) have this greater ‘weight’ in the market, that can lead to the movements and trends highlighted above.

This is very important for September as we have both the US Federal Reserve Interest Rate decision, plus we have the latest Eurozone Interest Rate decision too.

Whilst these decisions are 20th September (the FED) and the 28th (the ECB), the market will be looking for clues on data earlier in the month, ie now.

The Bank of England have their interest rate decision on the 21st, which is another key event this month.

If you have a currency exchange to consider this month or ahead, I would be keen to speak with you as there is an increased chance for volatility towards the middle and end of this month.

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