Sterling ended last week lower against the US Dollar after economic data showed that all three Purchasing Managers Index reports for the month of March came in below expectations, casting some doubts over the strength of the UK economy.
Against the Euro the Pound was little changed on Friday after it made sharp gains on Thursday as the European Central Bank said that it could use unconventional measures to tackle the threat of deflation in the Eurozone.
Looking ahead to the rest of this week we can expect the markets to pay close attention to Wednesday’s US Federal Reserve policy meeting and Thursday’s Bank of England monetary policy announcement. The Central Bank is expected to maintain interest rates at the record low level of 0.5% and leave its quantitative easing programme unchanged at £375 billion.
On Monday the Pound is set to see relatively little movement against its major peers due to a lack of domestic economic data releases. It has softened slightly against the Euro however due to the publication of better-than-expected industrial production data out of Germany and Spain.
Tuesday could provide some volatility for the Pound due to the release of Industrial and manufacturing production data for the UK. If both sets of data show that the sectors continue to strengthen we can expect Sterling to make gains against its peers. A weaker than expected level is likely to do the opposite as it would cast some doubt over the strength of the UK economy.
Wednesday sees the publication of the balance of trade data for the month of February. Economists are forecasting that the UK’s trade deficit narrowed. If so then Sterling could find support.
The week’s main event occurs on Thursday with the Bank of England interest rate announcement and policy meeting on the banks quantitative easing programme. Analysts are expecting no changes to the rate or QE amount. Attention will be focused on the press conference that follows the announcement. Investors will be looking to see signs of any future changes to policy.
Friday looks set to be a fairly quiet affair for the Pound due to a lack of domestic data being released. Instead attention will be placed on data releases from China, the USA and Eurozone member nations.
Key GBP events this week
Tuesday April 8th – UK Industrial & Manufacturing output data
Wednesday April 9th – UK Balance of Trade data
Thursday April 10th – BoE interest rate & QE announcement
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6572 ,
Pound Sterling,,Euro,1.2083 ,
Pound Sterling,,Australian Dollar,1.7840 ,
Pound Sterling,,Canadian Dollar,1.8208 ,
[/table]
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