Sterling Exchange Rates

Monday – This week the currency markets start off with a relatively quiet day with European industrial production figures this morning which are expected to show a decline compared to last year which may lead to a decline in EUR exchange rates. Following this we have some economic data due for America with US retail sales data probably the most noteworthy and the expectation is for the data to show a big improvement which may provide some USD strength which could provide those clients looking to sell Dollars with a much needed opportunity.

Tuesday – Following a quieter day for economic data it seems that Tuesday will be a very busy day in the markets with a raft of UK economic data due for announcement. In the morning at 9:30am there is inflation data in the form of Consumer Price Index (CPI) which is expected to show a very slight drop which, if this happens, will mean the current trend in UK inflation is down having spent a long period close to the Bank of England’s (BoE) target of 2%. One of the reasons Sterling has been so strong of late is because of strong economic data especially with good, steady inflation figures whereas in Europe inflation levels have been dropping and are very close to falling into negative levels. So, should UK inflation continue to drop then we could see Sterling fall especially against the Euro and we find ourselves in a similar situation to that of the Eurozone. Also, on Tuesday we have house price figures, production figures and then in Europe trade balance figures. In the afternoon there is US niflation data which, similarly to the UK could be a crucial data set.

Wednesday – The key announcement for Sterling on Wednesday is the latest set of unemployment figures as they have been earmarked as one of the indicators as to not only the overall performance of the UK economy but also when interest rates may be changed. The expectation is for unemployment levels to fall from the current 7.2% down to 7.1%. Also announced in the morning is Eurozone inflation which, as mentioned, is a major focus for the markets and could dictate GBP EUR exchange rates. This coupled with the UK unemployment data is likely to mean we could have a very volatile morning on the currency markets. Finally on Wednesday we have the latest set of Canadian interest rate decision where interest rates are expected to remain on hold at 1%.

Thursday – Thursday is a quieter day with Canadian inflation data due out at 13:30 and US jobless claims both of which could be big movers for both CAD and USD respectively. This is the last major economic data of the week as Friday is Good Friday bank holiday.

So, with a busy, albeit shorter week on the currency markets it could be a very important period especially for Sterling Euro exchange rates. If UK unemployment falls and Eurozone inflation data shows another drop we could see GBP EUR exchange rates push back up to some of the highest levels we have seen this year, however if unemployment doesn’t drop as expected then it may mean we start to fall back below the 1.20 level. Either way it is likely to be volatile and therefore a very important week for anyone with a currency requirement.