Busy week ahead

22 August, 2016

Tom Arnold

Last week was a slightly surprising one on the markets with the Pound actually managing to find some strength off the back of surprisingly strong economic data. Firstly, UK inflation came in above expectations and then a couple of days later we saw UK retail sales figures come in likewise significantly above expectations. The Pound made multi-cent gains against both the Euro and the US Dollar. However, on Friday these gains started to slip back and indeed this morning we have already seen the Pound slip back further.

The optimism of last week, with the first post-Brexit-vote data coming in above expectations, has already ebbed away with both UBS and HSBC reporting this morning that they expect GBPEUR parity by the end of 2017. Hopes that the UK economy is coping better than forecast following the EU referendum, have been dashed under further analysis – retail sales and inflation are both critical data releases, but large scale capital spending is what the UK economy needs to really push on, not just a short term jump in consumer spending. Capex figures are released at the same time as GDP, so the first post=Brexit-vote set of numbers will come in October, but the writing is largely on the wall, with a massive cut back in corporate spending being evident already and widely reported.

The week ahead is a busy one, with plenty of opportunity for volatility on the currency markets:

German Services + Manufacturing PMI
European Services + Manufacturing PMI
US Manufacturing PMI
US New Home Sales

German GDP
UK Mortgage Approvals
US House Price Index

Jackson Hole Symposium – International Central Bankers Meeting
US Jobless Claims
US Services PMI

Jackson Hole Symposium
German GFK Consumer Confidence Survey

Make sure to stay in close contact with your Currency Index account manager to be kept informed of exactly what is happening and how the data that is coming out is affecting the markets.