Excel Currencies Blog

'PMI Friday' to ensure heightened volatility continues into next week..
 

The £-€ rate finds itself down 0.5% compared to last week with the £-$ rate losing over 1% in value during the same period. The latter was almost expected, although a 1% fall in just 1-week is a bit dramatic. It means the pair has now lost 3% in the last 4-weeks and the trend looks set to continue this week..

The Pound's 'wobble' is turning into something a bit more worrying and we will find out this week just how concerned we should be. Last week, UK GDP missed its forecast by quite some distance and the latest jobs data showed a softening in the labour market. For Sterling sellers, 6/7 big events await you this week, 3/4 of which are produced by the UK.

First up, is Wednesday's UK inflation and core inflation numbers with economists and the BoE more fixated on the core number. The main inflation number you will read about in the mainstream media, can be a fair bit off forecast and is rather misleading anyway, so will be of little interest to traders betting on GBP. A 0.1% drop is expected in the core inflation rate, which will be needed for Sterling to remain at current levels.

On Thursday, we have the BoE interest rate decision where the bank is expected to announce a 25bp hike. The voting of what to do last time out was all over the place and so the market will be watching intently on who votes for what, to have any confidence in the central bank and its £. The meeting after is important too for forward guidance and we will learn whether the bank is on the same wavelength as the ECB.

Friday is 'PMI day' from the majors and so a big day to compare the current state of economies all at once. The Pound needs the UK to remain robust which is what the figures expect, but who knows with this type of release. There are also consumer confidence and retail sales figures that play an important part in the strength of the Pound too both near and long term, so an exciting end to the week. 


EUR
The Euro continues to lose ground against the USD, but did stage a fightback versus the GBP last week. It's a quiet economic week for the bloc with just Friday's PMI of note and so the single currency will be playing the sitting duck role.


USD
The main release from the US this week comes on Wednesday evening. The Fed interest rate decision and press conference after are key market movers. The interest rate is expected to remain unchanged with forward guidance for maybe one more rate hike this year. This is really a 50-50 outcome as the Fed likes to surprise. Friday's PMI will also be one to watch.