Pound struggles to maintain gains

Following the last week it was clear sterling was on the rise again with it gaining nearly three cents in a couple of days! However this was only to be short lived with a significant market drop across the board after poor retail sales begin released. With the market already pricing in a modest retail sales result of 0.5%+ growth it plummeted when it was declared the retail sales in fact has made a sudden change of direction and is currently at -0.6% growth. This came as a shock behind the positive forecast and sent sterling into a free fall. With this being the fifth consecutive month of negative retails sales growth it is clear sterling and the economy is struggling to make gains ahead of the massive amount of political uncertainty with Brexit.

With this negative outcome last week we could see sterling take a turn for the best with the PMI announcement on Friday – providing a positive result this would send sterling into a rebound following the strength lost on the retail sales drop last Friday. A positive PMI shows purchasing is on the way up and indicates a positive outlook for the UK’s economy. This would be a large indicator to whether their will be a BOE rate cut the 30th of Jan.

There is going to be a lot of volatility in the next few weeks with eco data releases impacting the market significantly depending on the positive or negative outcomes. Whether if you are a buyer or a seller please consider your budget or worst case scenario rate and think is it worth holding on if you cannot take the rate moving any further against you. Please get in touch with your currency consultant to discuss how we can help limit your risk.

Key data releases for the week ahead.

21/01/20

09:30 GBP Claimant Count Change(M/M)(DEC, 2019)
10:00 German ZEW Survey (Economic Sentiment)(M/M)(JAN)

22/01/20

09:30 GBP retail sales
13:30 bank of Canada core CPI
15:00 CAD rate decision

23/01/20

12:45 ECB rate Decision
10:45 NZD CPI

24/01/20

09:00 Eurozone PMI
09:30 GBP PMI