Sterling exchange rates rally, busy week ahead for currency markets

6 January, 2014

Rob Bastin

Friday’s trading saw activity for the pound starting to pick up as we now head into the first full week of the new year. Early data releases for the UK were largely positive amongst a mixed bag of figures. The key release was December’s PMI Construction figure which was around expectations at 62.1, down slightly from November but still a positive growth figure. Mortgage approvals were also on the increase however the Net Lending to individuals has dropped by £0.2B from last month and came in some £0.5B short of analysts’ expectations.

On the whole sterling was supported from the morning’s data and rallied against the Euro and US Dollar during Friday morning, regaining some of the lost ground seen on Thursday before reversing in the afternoon as the US markets opened. This reversal indicates how vulnerable the pound is at these peak levels and also how much indecision there is the market as to the next direction for the pound. Eventually the pound closed the week at higher levels providing some excellent buying opportunities ahead of a busy week.

This week sees a host of key Euro-zone data leading us up the interest decision of both the UK and Euro-zone on Thursday. Last month sterling lost 1 cent against the Euro after an upbeat press conference from Mario Draghi, who will no doubt make every effort to continue this positive sentiment towards the single currency. Industrial & Manufacturing production is the main UK focus on Friday with Euro-zone GDP, and US non-farm payrolls all on the same day to tie up what is likely to be a busy week ahead. With all these releases ahead, make sure your account manager knows of your imminent requirements so that we can keep you informed of any favourable swings to help maximise your transfer.

The main data releases to note this week are as below:

9:00am – Euro-zone Services PMI
9:30am – UK Services PMI

10:00am – Euro-zone Consumer & Producer Price Index

10:00am – Euro-zone Retail Sales & Unemployment rate
7:00pm – US FOMC Minutes

12:00pm – Bank of England interest rate decision
12:45pm – ECB interest rate decision
1:30pm – ECB press conference

9:30am – UK Industrial and Manufacturing Production / Trade Balance
10:00am – Euro-zone GDP
1:30pm – US Non-farm payrolls & unemployment rate