Relatively quiet week leaves the Pound vulnerable to trends

19 April, 2016

Tom Arnold

The relatively quiet week on the currency markets we have been experiencing so far continues today, with little in the way of critical data, and as such it is likely that overall trends will govern the majority of the movement we can expect to see.

In Europe there are a couple of releases that are worth watching in the form of current account, construction output and ZEW economic sentiment surveys for both Germany and the Eurozone as a whole, all out this morning. Expectations are for slight improvements across the board, particularly with the German ZEW survey which is watched closely, with Germany being the largest economy within the Eurozone.

In the US we see some minor housing figures later on and then we hear from a number of the world’s central bankers, with Australia, Canada and the UK’s governors all speaking over the course of the afternoon. There is no expectation of anything ground breaking here, but obviously central bankers are always worth monitoring because even the slightest hint of policy change can have an effect.

The UK is without any critical data releases until tomorrow’s unemployment numbers and Thursday’s retail sales figures. As a result the Pound is at the mercy of the other currencies which are more active, particularly the Euro which could become stronger if the data comes out this morning as expected.

In the background the campaigning ahead of the June EU referendum is fully under way now, so almost daily we will see moves from both the IN and OUT campaigns. The most recent was George Osborne’s economic document which estimated that each UK household would be £4300 worse off by 2030 in the event of a Brexit – whether this has had much impact on the market is hard to tell, but the Pound has had a slightly better few days, so maybe this is a sign the Pound will be stronger if he IN campaign dominates. In any event with the polls neck and neck we can expect the overall uncertainty to be the main driver and as such this window of Sterling gains is likely to be short lived.

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