Sterling’s run continues despite shy data

1 April, 2014

Rob Bastin

Following the pounds best performing week this year, sterling continued its good run of form posting small gains against most of its majors. Early data for the UK actually fell just short of expectations with mortgage approvals seeing a drop to 70.309k from 76.753k last month and consumer credit borrowing also shy of the £0.7B consensus at £0.552B. On the plus side Net Lending to individuals was up to £2.3B from £2.1B in January. This saw an unsettled start to the week for the pound and traders awaited further release from the Euro-zone and US before committing to their positions.

Euro-zone inflation was to shortly follow which has dropped to just 0.8% on the year from 1.0% previously, raising further concerns over a deflation scenario over the coming months. The US data in the afternoon also carried weakness with the Chicago PMI figures dropping to 55.9 from 59.8 in February. New Fed chair Janet Yellen also spoke at lunch time stating that the US ‘needs extraordinary support for some time’. With concerns over the US and Euro-zone figures traders eventually favoured the pound as rates rallied late in the afternoon.

Overnight the RBA have had their monthly interest rate meeting where rates were held again at a base rate of 2.5% and a statement of ‘continued rate stability’ was to accompany this announcement. The Aussie Dollar is currently trading at its strongest levels in 4 months against the pound and Euro and looks set to strengthen further over the coming months. Anyone looking to send money overseas to Australia therefore may wish to consider a more urgent approach to maximise their exchange rate.

Today sees the latest manufacturing PMI figures for the Euro-zone at 8am, UK at 9am and US at 1pm and 2pm. Euro-zone unemployment rate is also announced at 9am and so the day ahead is somewhat full of key data for the 3 majors. Keep in close contact with your broker to be ahead of the game should you be looking for any favourable exchange rates this week.