A busy week of data for sterling exchange rates

Last month saw sterling lose over 4% vs the euro, 1.8% vs. the US Dollar, over 6% vs the South African Rand and Aussie and Kiwi dollars.

There were several key event including the earthquake in Japan, and problems in the Middle east that overshadowed market data making the markets even more unpredictable and volatile than normal.  However the main driver for sterling remained interest rate expectations.  The MPC in the UK had been expected to hike base rates 0.25% in May, but that has now been set back to August and looks unlikely to happen even then in my opinion.

This month economic data releases may drive the market a little more than in March, so if you have a transfer to make, keep a close eye on these releases.  To discuss anything in more detail, fill in the form on the right and you can speak to a currency specialist.

The key data this week for the pound starts with Halifax house prices – due out overnight Monday.  This could have a knock on effect to consumer sentiment and the knock on effect can affect retail sales data if figures are really bad.

On Tuesday at 09:00 we have purchasing manager index data– a measure of inflation, that can affect interest rate expectations.  As this was a key drive in the weakness of sterling last month it could be an important piece of information for the Pound’s short term future.

On wednesday we have a host of manufacturing and industrial production data at 09:30. The manufacturing sector has performed well in the UK over the last 2 years which is surprising considering our reliance on financial services.  However, the weak pound has assisted exporters helping manufacturing organisations in the UK.

Thursday see possibly the most important release of the week, with the Bank of England minutes at 12 noon.   A surprise hike could really help the pound spike in value, however that looks highly unlikely as economic growth in the UK has slowed dramatically over the last 6 months.  Couple this with the austerity measures, from which public sector job losses came into effect and the end of March, and the uncertainty over the economy looks set to lead the BoE to leave interest rates unchanged.