Mixed data halts Sterling’s gains
23 April, 2018
A poor week for Sterling last week meant that its recent gains and highs were quickly lost, mainly due to poor UK economic data, with inflation coming in at 2.5%, well below the expected figure. Low inflation figures meaning a rate hike in May is less likely, so hopes of the markets getting to 1.16 against the Euro and 1.45 against the USD are now very slim. Retail sales also coming in below expectations, mainly due to the poor weather we have had, weak data suggesting that this probably isn’t the correct time to raise interest rates. The weeks biggest gainer against Sterling was the USD, gaining 2.5 cents by close of business Friday.
Carney, speaking on Thursday evening, put the brakes on the momentum recently gained by Sterling by shedding light on plans to raise interest rates. With Brexit uncertainty still very much on everyone’s mind, Carney highlighted that until this is cleared up any interest rate hike will be gradual. But also mentioned that we should be prepared for several rate hikes over the next few years.
With the month now coming to an end and as is the case this time of the month, the coming week is quiet, to begin with on data front. With the week’s major data to keep an eye on being the ECB’s press conference on Thursday and UK GDP figures on Friday. Barclays predicting GDP to come down by 0.2%, should this be the case, GBPEUR could easily end up to levels seen in December by close of business this week. Stay in touch with your account manager to keep informed of all the updates.
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