Sterling exchange rates fell at the end of last week after comments from Jackson Hole, bringing GBPEUR down to 1.17 and GBPUSD down to 1.17 as well. Comments from Jackson Hole were still pretty hawkish stating the Fed is looking to raise rates again in September by 75 bps- which instantly gave the Dollar a big boost.

So what are the big factors as we go into September? The Fed, as mentioned, are looking to raise interest rates again by 75bps, the ECB are also looking to raise rates again by 50/75bps, and the Bank of England are also looking to raise rates by 50/75 bps. On top of this, the Conservative leadership battle in the UK will also have concluded by the end of this week and the UK will have a new Prime Minister. Unfortunately, they will have big problems on their plate with the energy price cap going up again on Friday, and generally rising living costs will inevitably mean emergency intervention is needed- whether this is in the form of an emergency budget or something else is unknown, but something will need to be done.

Considering the above, what can be expected on exchange rates? GBPUSD, unfortunately, we are expecting to stay low, and maybe lower than the current price- 1.15-1.17 seems like a sensible area for now, with no real scope to go back up until 2023/24. GBPEUR is slightly different, I am expecting prices to remain between 1.15-1.19- a wide range I know, but both the UK and Europe will have their good days and bad days, whereas the U.S Dollar will be used a safe haven in all scenarios.