The Pound had a widely positive week as confidence remains high that the UK economy will continue to strengthen and outperform its rivals.
At the start of the week we saw the release of PMI data for the nation’s service sector which came in softer than forecast. The data caused the currency to soften only slightly as economists still took an upbeat approach to the report.
Despite the positive rhetoric the Pound was dragged down by comments made by Chancellor of the Exchequer, George Osborne who said that he would be introducing additional spending cuts to ensure the UK recovery remains on track. The promise of more austerity did not go down well with economists.
Against the US Dollar the Pound was able to climb to a two-year high after the British chambers of commerce released a report which stated that the UK recovery is expected to continue at a rapid pace. The currency also came close to a one-month against the Euro as investors predicted that the Bank of England would maintain interest rates at a record low and maintain its monetary stimulus programme.
Midweek the economists were proven correct as the BoE did indeed keep rates steady at 0.5%. After the Bank made its monthly statement the Pound climbed to a one-year high against the Euro and ticked higher against the majority of its most traded peers.
As the week drew to a close the Pound softened as a number of data releases showed that industrial and manufacturing output in the UK failed to reach expectations. Both sectors showed stagnation in November suggesting that the economy could be slowing down.
Looking ahead to this week we forecast that the Pound will reverse the losses it made over the weekend and regain ground against the Euro and US Dollar on Tuesday. Inflation data is expected to show a rise and will offer further support to the currency. After that, the next major data releases for the UK come on Friday. Retail sales too are expected to show a rise.
Key data for the week ahead:
Tuesday 14th – UK retail Price index, UK PPI reports
Friday 17th – UK retail sales data
Current Pound Sterling (GBP) Exchange Rates:
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6439 <
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.2031 <
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.8184 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9727 <
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6082 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8313 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0. 5501 >
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0. 5070 >
(As of 10:30 GMT)
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