Sterling Exchange Rates Supported ahead of UK Data (James Lovick)

The pound should be set for an interesting day with lots of UK data to keep the markets guessing. UK industrial and production manufacturing figures are released this morning at 09:30 and pose a small risk for sterling exchange rates. Recent UK data has arrived weaker than expected but the blame has been firmly placed on the cold weather last month from the Beast from the East. Last week’s construction and services data in particular took sharp falls but the markets have largely shrugged of the poorer data. A weak set of numbers is expected this morning although if optimism is high then the pound shouldn’t drop off too much.

UK Gross Domestic Product projections for the 2nd Quarter are released this afternoon from the National Institute for Economic and Social Research (NIESR) and could be a particularly interesting data release to watch. The GDP estimate is seen as an excellent precursor to the official data and can end up creating substantial volatility for the pound. Anything positive here this afternoon could see a further boost for sterling exchange rates. Rates for GBP EUR are still very close to the 1.15 target but there is little momentum at present to push beyond these levels. Clients looking to buy Euros would be wise to consider taking advantage of the recent spike to avoid potential disappointment.

Brexit has been much quieter in the next as one would expect with the Easter recess although it will only be a matter of time before it starts making the headlines again. There is a still a long way to go in this negotiation and whilst the outlook in my view is looking much more optimistic it wouldn’t take much to see a fall in the price of sterling. Any suggestion of the “no deal” scenario could see a sharp fall in the price of sterling.

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