Sterling rates have continued to be under pressure through this month, falling 2% against the Euro. This is because of the the latest round of economic data released from the UK which is a severe warning for the UK, this being that inflation is now higher than wage inflation
This means consumers have less to spend and that costs may well continue to climb. This has happened as a result of the Brexit vote and the fall in Sterling thereafter making importing raw materials a lot more expensive. This in turn has resulted in Industrial output falling faster than expected, widening the trade deficit. UK house sales have also fallen in April to their lowest levels since the EU referendum.
The Euro gained 2 cents against Sterling and more than 2 cents against the Dollar last week, as investors and speculators raise their expectations that the European Central Bank may look to start tapering their quantitative easing program soon.
The next European Central Bank monetary policy meeting is on June 8th, the same date as the election will be held in the U.K so we may see an extremely volatile period.
Last week GBPUSD levels recently broke through the 1.30 barrier for the first time in months which has been seen as a key residence level. This has mainly been down to the USD fall from grace rather than Sterling gains. Even though economic data from the US continues to show improvements the concerns about President Trump continues to weaken the Greenbacks value.
Key dates to look out for:
Mon 22nd May: GBP – Tereasa May speech
Tues 23rd May: GBP – Inflation report
Weds 24th – CAD – BOC rate statement
USD – FOMC minutes
Thurs 25th May – USD – OPEC meeting
Fri 26th May – USD – Durable goods order