Pound Sterling Forecast – The Week Ahead for Sterling Exchange Rates

GBP EUR Could Head Lower After Growth Revisions

First and foremost it has been a tough start to the week in terms of economic data, which has led to a drop-off against most majors.

Growth figures for the month came out at 0.2% instead of the predicted 0.5%, Industrial and Manufacturing production figures also missed the mark, which again just adds more fuel to the fire that a long and challenging recession is fast approaching for the U.K.

Our condolences to the Royal family after the terrible news that Her Majesty had passed on Thursday of last week, I personally popped to Buckingham palace after a day at the test match on Saturday to pay my respects and the atmosphere there was really something to take in, what a fantastic lady and a real inspiration on how to conduct yourself through both good times and bad.

It is important to note from a currency perspective, that there are a few changes that readers should be aware of, first and foremost we will have a Bank Holiday in the UK on Monday 19th September for the funeral, and secondly, the Bank of England have now postponed their interest rate decision, so it will take place on Thursday 22nd July as opposed to this coming Thursday.

Economic data this week

Even with the BOE moving the interest rate decision we still have plenty of important data out this week, starting with unemployment and average earnings figures tomorrow morning.

Unemployment is expected to remain at 3.8%, however, should this data also miss the mark it could cause another testing start to the day for the pound.

For those with an interest in the Dollar, we have US inflation figures out tomorrow afternoon which may impact the Federal Reserve’s next move on interest rates.

Wednesday is an important day for inflation in the UK, with all inflation figures coming out first thing in the morning. The sheer level of inflation is having much wider implications on the U.K economy and is also being pushed up by the weakness of the pound.

Expectations are for a small rise but anything different from that not only could impact how the Bank of England acts next week but could also cause an extremely volatile morning for Sterling exchange rates.

The BOE is currently expected to progress with a 75 basis point hike at next Thursday’s meeting, anything to firm that up more or to potentially alter expectations will move the pound accordingly.

Thursday is now a little quieter with the BOE decision being moved, we have US retail sales in the afternoon for those following the Dollar.

Rounding off the week we have UK Retail Sales on Friday, with energy prices rising and the general cost of living being such a big problem in the U.K it is unlikely consumers have been out spending too much so expectations are for another drop-off in Retail Sales which might give the pound a poor end to the week.

If you have a pending currency exchange to carry out and you would like to speak to one of our traders about upcoming news that may impact the cost of your transaction, feel free to email me (Daniel Wright) directly at [email protected] or click here to make an enquiry on our website and we will be in touch with you shortly.