Can Sterling Bump The Trend

Last week was very much a bad one for the pound as we saw on average around 2 percent drops against its major pairings, including the Euro, Kiwi and Aussie dollars. With surprise comments coming from the Federal Reserve over in the US mid week the only currency the pound fared okay against was the greenback.

There was little data out to support the pound apart from Bank of England minutes and unemployment data on Wednesday. The BoE’s stance on the strong pound we have been enjoying was clear from Mark Carey’s comments so we were unlikely to get any support from the minutes and the worse than expected unemployment data didn’t help. We also heard reports that with the strong pound and inflationary pressures we may even be looking at interest rate cuts here in the UK before we see them rise. Any cut would be near zero percent, great for all us mortgage holders but less so for the savers among us and more specifically, less favorable for those looking to exchange sterling to a foreign currency as rate cuts (or talk of cuts) mean less for your pound as we saw over the course of last weeks trade.

So as the month rolls on towards the end, all bar a couple of days, what do we have install? The answer, not that much for the UK but a few potential market movers.

The week ahead:

• Monday: German and Greek leaders meet to discuss concerns on Greece’s bailout plan.
• Tuesday: EU and German manufacturing PMI, UK inflation and US inflation.
• Wednesday: UK mortgage approvals, US durable goods orders, Swiss SNB quarterly bulletin.
• Thursday: German Gfk consumer confidence survey, UK retail sales, UK CBI industrial trends survey, Canadian central bank Governor Poloz speech, US services PMI.
• Friday: UK Gfk consumer confidence survey, US GDP

Inflation is going to be the main focus for the week here in the UK, with retail sales the next most key release. Apart from these, its likely to be the ecostats from around the world, along with any comments on Greece which pave the way for currency movement. Will we be sentiment led like last week, resulting in possible further losses for the pound or will inflation pick up giving the sterling a much needed boost from its losses of last week? 

Its anyone’s guess in reality so if you don’t have nerves of steel, but have a currency transfer to make in the coming days, give one of the CI team a call today and look at fixing your requirement sooner rather than later.