Currency wars heating up

Last week

May has continued its poor showing for the pound and it was expected to be hit further, with very little UK-centric data releases on the Friday before bank holiday weekend. A mixture of Import/Export figures, Markit services and retail sales from Europe were all due. This all would have played into sterling’s hands as the vast majority came in below expectations – although such is the pounds weak position due to the latest happenings with Brexit that there was almost no rate-movement at all. This is a clear indication that, although we may have more weak euro data or strong figures from the UK, the pound will struggle to achieve levels much higher than they currently are and are in severe danger of dropping further – if you are buying a property in Europe within the next 6 months or so it is worth a serious think about locking in current rates for later in the year to avoid your cost skyrocketing.

This week

Today, the first day back after the bank holiday, in a somewhat quiet day we have already seen industrial production from Germany coming in above expectation and Halifax house prices from the UK which unsurprisingly, taking into account the current market climate, came in down on the year and way down on the MoM, causing GBP-EUR to drop a third of a cent and nearly a cent against the USD, continuing the decline thanks to Dollar strength off the back of confirmed interest rate hikes later this spring/summer.

Generally, it is a very quiet week with only Thursday expecting any major data releases and significant reaction from the FX markets. On Thursday we have a huge amount of news from the UK including Industrial production, manufacturing, trade balances, BoE asset purchase, interest rate decision, Monetary policy meeting, vote and quarterly report, minutes and Governor Mark Carney’s speech and GDP estimate! A lot for the markets to digest, with the possibility of pricing in prior to the results being published. Later on in the day, we have CPI from the US!