Pound Sterling Forecast – Economic data due out this week that may impact Sterling exchange rates (Daniel Wright)

A slow start to the week for the Pound following on from a sharp finish to trading on Friday where we saw Sterling make gains about most major currencies.

Tomorrow we have the first set of important data out for the U.K for the week as a flurry of inflation data is released at 09:30am. Inflation is one of the key points of interest for investors and economists at the moment and it does appear to be rising fairly rapidly.

A high inflation figure tomorrow may spark a little Sterling strength as it heightens the chance of an interest rate high coming from the Bank of England in the coming months. One of the best ways to combat high inflation is to raise interest rates, personally I do not see a rate rise in the U.K before 2018 being possible but the markets do move on rumour as well as fact so higher inflation in the morning may give the pound a boost.

On the other side of the coin we do have a  problem with inflation getting much higher as average earnings figures (people’s wages) not rising at the same pace. This basically means that peoples wages are going up slower than the cost of goods and services, essentially meaning that slowly but surely people with be able to afford less and the economy will slow up.

Later on in the week we have Retail Sales figures released on Thursday at 09:30am. Expectations are for Retails Sales to actually be fairly good this time around, possibly due to the fact that the weather in June was absolutely fantastic which inevitably brings people out in the sunshine spending the money they do have.

Finally for the U.K we have Public Sector Net Borrowing figures on Friday. This figure basically shows the amount of new debt held by the Government, ideally we would like to see a negative figure to give Sterling a good boost at the end of the week.

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