Sterling has had a strong day against a host of currencies following a strong showing this morning for UK industrial and manufacturing figures. Both were much stronger than forecast setting the tone for the day with the pound rallying to a high of 1.2145 against the Euro and 1.6755 against the US dollar. Sterling was also to find some support following this afternoons NIESR (National Institute for Economic and Social Research) latest GDP estimate which has pushed its latest estimate from 0.8% to 0.9% This bodes well for official GDP data scheduled for release later this month.
Looking ahead to the rest of the week and tomorrows FOMC minutes will be the next main area to focus on. This will give insight as to future monetary policy and what the FED may have in store relating to future tapering of QE and interest rates. This can have a big impact on risk appetite and can prove to be a volatile time during and after its release. These will be made publicly available at 19:00 tomorrow.
Looking ahead to Thursday and the ECB monthly report will be the focus as this contains a detailed analysis of the prevailing economic situation and the risks to price stability. It also provides articles on a wide range of topics related to the tasks of the ECB and hence clues can be given as to future policy. With the current deflationary pressures in Europe this will be of particular interest, any clues as to whether they may consider an interest rate cut and this could see further pressure on the Euro.
Following the ECB monthly report at 09:00 will be the Bank of England interest rate decision at 12:00. Rates are expected to remain on hold at 0.5% and I would expect little impact on the pound as a result.
For me the pound is currently representing some good value trading at a one month high against the Euro and a near four year high against the greenback. To take advantage and find out more about the currency service we provide then please contact the office on 01494 787478 or email Mike at [email protected]