Sterling Gears Up For Rally

Yesterday we saw the pound continue to push up above key resistance ceilings across the board given the boost by a flurry of better than expected data releases. Industrial production figures came out at 2.7 percent for the year, over the forecast 2.2 percent whilst the monthly figure was 0.9 percent rather than the expected 0.3 percent – showing a decent improvement. Manufacturing production also did well, with the monthly figure posting at 1 percent over 0.3 percent expected and 3.8 percent over the forecast 3.1 percent yearly figure.

Over in Canada, the Loonie has been on its own rally of late, moving around 2 percent against sterling, making transferring funds to Canada a fair amount more expensive. Following the UK data in the morning Canada released their housing starts and building permits figures, giving an indication to how the new-build housing market is going which is a good indicator to economic health generally. The figures were not great, posting 156,800 starts compared to the forecast 191,000. Building permits were down by 11.6 percent over the expected 2.7 percent so with these figures fresh in traders’ minds we saw a fresh round of selling and sterling managed to make just over a cent over the day.

Overnight there was a couple of antipodean releases in the shape of New Zealand retail sales which over achieved, leading the Kiwi dollar to gain a solid cent against sterling which held over the rest of Asian trading. Also Australia released the Westpac consumer confidence index for April which saw a vast improvement from last month, posting a figure of 0.3 percent compared to -0.7 percent previously. Home loans were also up by 2.3 percent from last month, all which gave the Aussie grounds to strengthen across the board, taking a half cent from sterling.

So can sterling continue to push on today making the most of recent gains or will the cost of sending money overseas become more expensive if sterling slips back. The pound should benefit from the fact the IMF announced yesterday the UK will be the fastest growing economy in the G7 this year, upgrading our forecast to 2.9 percent growth from 2.4 percent earlier in the year, which is clearly very positive for us and the pound, so we will see how the markets react. We also have a few data releases today, the main ones being German trade balance, which has already been released earlier falling short of forecasts. Next up this morning is UK trade balance and the US Federal Reserve minutes from its recent interest rate setting meet which come out at 7pm.  There is a raft of non-key data throughout the day so make sure to stay in touch with your CI trader with any upcoming requirements.