The Pound remained trading at a five-and-a-half week low against the US Dollar and was little moved against the Euro on Friday after it retreated from the psychologically key 1.20 level.
Investors widely ignored the release of data which showed that UK public sector borrowing increased by £7.5 billion last month. The figure was below economist expectations for an increase of £8.6 billion but was an improvement on January’s figure of a £6.4 billion decline.
A separate report released by the Office for National Statistics showed that the UK government’s financial situation improved last month.
Cumulative burrowing by the government so far this financial year came in at £99.3 billion, 4.5% lower than at the same time as last year. With just one more month left to go before the end of the financial year the report shows that the Chancellor is on track to meet his new full-year burrowing forecast of £108 billion, equivalent of 6.6% of GDP.
Friday’s session is relatively devoid of important data releases out of the USA and Europe. Instead attention is focusing on comments due to be made by Federal Reserve policy makers. Investors will be interested to hear what they have to say after new Fed Chair Janet Yellen surprised the markets by hinting that interest rates could rise next year.
Against the commodity based currencies Sterling weakened overnight as market sentiment improved. Tensions remain high in Ukraine but the prospect of war seems to have eased as the West and Russia settle into a tit for tat bout of imposing sanctions on each other. Despite the war threat easing the sanctions could have a negative impact on the global economy.
Sterling is likely to experience volatility next week due to a number of key data releases.
Data due for release next week:
24/3/14 – Nationwide House Prices MOM/YOY
25/3/14 – PPI, Inflation Rate and Retail Price Index data
26/3/14 – GDP growth rate final
27/3/14 – Retail ales
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,1.6503 ,
Pound Sterling,,Euro,1.1968 ,
Pound Sterling,,Australian Dollar,1.8164 ,
Pound Sterling,,Canadian Dollar,1.8545 ,
[/table]
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