Sterling steam runs out after busy week

Last week’s trading saw the pound turn a corner with rates closing on Friday lower than they opened on Monday against all major currencies. One by one the pound has started dropping from its recent gains with the Euro being the last to turn due to its own weakness. Even positive PMI data failed to support the pound towards the end of the week as the sellers start to control the sterling markets. With peak rates experienced against the Euro last week we have been at our busiest with clients taking out forward contracts due to the strong likelihood that we won’t be seeing any better buying levels in the coming weeks and months. Just a 10% deposit can secure your currency needs for up to 2 years in advance and is certainly worth considering for anyone buying or looking to buy in the next few months.

The week finished on Friday with UK Services PMI coming in below par at 58.7, down from 60.5 and these results were echoed with the Euro-zones PMI, all below expectation and at a lower growth level than the UK. Euro-zone Retail Sales however were vastly improved with growth of 1.9% on the year compared to just 0.5% last month. The big news of course of Friday was the headline USA announcement of non-farm payroll figures. As expected the results were very strong up to 248k from 180k previously and the unemployment rate has now dropped to 5.9% from 6.1%. The USA continue to post positive results and as a result of this and the Euro-zone struggles, it is the US Dollar that is very much in favour currently with GBP/USD trading at its lowest rates in a year and EUR/USD also and its lowest in 2 years.

With the pressure now on the pound the markets will be wary of any weak data and the main releases to look out for this week are detailed as below:

Tuesday

4:30am (AUD) – RBA interest rate decision

9:30am (GBP) – UK Industrial & Manufacturing Production

9:30pm (USD) – US FED speech from Bernanke

Wednesday

7:00pm (USD) – FOMC Minutes

Thursday

1:30am (AUD) – Employment Change/Employment Rate

9:00am (EUR) – ECB Monthly Report

12:00pm (GBP) – BoE Interest Rate Decision

Friday

9:30am (GBP) – Goods/Total trade Balance

1:30pm (CAD) – Unemployment Rate