Last week was another positive one for the Pound as it continued to push higher against the majority of its peers and was bolstered by the release of more positive economic data.
On Tuesday the currency saw a bit of a surge against the Euro and other major peers after data showed that inflation in the UK softened further to 2%, matching the target set by the Bank of England.
According to the Office for National Statistics the UK’s inflation rate, as measured by a Consumer Price Index fell to 2% in December, down from the previous month’s figure of 2.1%. The fall is the first time that inflation has matched the BoE’s target in more than four years. The data boosted confidence in the economy and gave credibility to the government’s economic policy.
The week was relatively quiet in terms of domestic data for the Pound and as a result the currency softened following positive industrial production reports out of the Eurozone.
It wasn’t until the end of the week that the Pound regained ground and punched higher. Sterling pushed beyond the 1.20 level against the Euro and the 1.64 level against the US Dollar after reports showed that UK retail sales were considerably higher than what economists had been predicting.
On the year sales were 6.1 per cent higher, a considerably stronger result than the 3.2 per cent annual advance expected and the best result for nine years.
Looking ahead to the week to come investors should be aware of the latest business optimism, employment figures, the publication of the Bank of England’s meeting minutes, UK reported sales data and BBA loans for house purchase statistics.
If those reports come in positively then the Pound is forecast to push higher.
Key data for the week ahead:
CBI Business optimism Index – Tuesday January 21st
MPC Meeting minutes, Unemployment rate, – Wednesday January 22nd
Current Pound Sterling (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,1.6437 ,
Pound Sterling,,Euro,1.2128 ,
Pound Sterling,,Australian Dollar,1.8659 ,
Pound Sterling,,Canadian Dollar,1.7995 ,
[/table]
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