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Weekly roundup: Sterling mixed week drops uncertainty on the UK

currency-newsWeekly roundup: Sterling mixed week drops uncertainty on the UK
After a quiet Monday, data on Tuesday caused jitters for the pound when it revealed that inflation had accelerated by more than expected. Consumer price growth was predicted to have risen from 2.3% to 2.6%, but instead jumped to 2.7%, suggesting households budgets will be squeezed even more than economists had thought.

However, the rest of the week’s data was more positive. Wage growth in the three months to March rose by 2.4% as forecast, while a surge of people entering employment of more than 100,000 above forecast pushed the unemployment rate down to 4.6% for the first quarter of the year.

Thursday’s retail sales figures also show much stronger-than-expected demand during April. Sales rose 2% on the month - double the rate forecast - and 4.5% on the year, against predictions of 2.6%.

Then, on Friday, data from the Confederation of British Industry (CBI) showed that manufacturers had experienced a surge in orders during May. This indicates that the weakened state of the pound since the referendum continues to bolster demand from overseas buyers, even though GBP exchange rates have recovered significantly from their post-referendum lows.

Tuesday and Thursday will be the key days for pound movement from a data point of view, with the rest of the week devoid of UK reports. Tomorrow’s government borrowing figures will show what kind of handle the Chancellor has on public spending; considering the deficit is expected to have near-doubled to -£8 billion, the pound looks likely to fall.

On Thursday another estimate of the first-quarter GDP will be released. This one is put together using more data than was available when the first was published, but forecasts suggest there won’t be any change to the unexpectedly-strong slowdown from 0.7% to 0.3% originally projected.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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