Pound holds steady ahead of important week of UK data

The pound traded sideways on Monday, as GBP investors braced for a slew of high-impact UK data releases later in the week.

Sterling is mixed so far this morning, with GBP/EUR stable at €1.1711 and GBP/USD dipping to $1.2426. GBP/CAD is rangebound at CA$1.7158, while GBP/AUD ticks up to AU$1.9367 and GBP/NZD is stable at NZ$2.1108.

Looking ahead, will a sharp rise in UK unemployment see the pound retreat through today’s session?

What’s been happening?

The pound wavered at the start of the week as GBP investors were reluctant to make any aggressive bets ahead of some notable upcoming UK economic releases.

GBP investors will be looking to the impending data for any hints as to when the Bank of England (BoE) might start cutting interest rates.

The US dollar initially stumbled on Monday as a prevailing risk-on market mood tempered demand for the safe-haven currency. Despite an escalation of tensions in the Middle East over the weekend, investors appeared optimistic that cooler heads will prevail, which stifled USD demand.

However, a subsequent souring of market sentiment and a stronger-than-expected domestic retail sales report quickly reversed the US dollar’s losses.

Dovish comments from several European Central Bank (ECB) policymakers acted as a headwind for the euro during yesterday’s session, as they largely reinforced expectations that the central bank will begin cutting interest rates in June.

What’s coming up?

Today’s session kicked off with the publication of the UK’s latest jobs report.

February’s figures reported that unemployment surged from 3.9% to a six-month high of 4.2%, while wage growth unexpectedly slowed from 6.1% to 6%.

The weaker-than-expected figures could pull the pound lower today as this may place pressure on the BoE to start cutting interest rates.

However, any subsequent movement in Sterling may be tempered ahead of a speech by BoE Governor Andrew Bailey later this afternoon. GBP investors will look to Bailey to provide more insight into the bank’s outlook on monetary policy, and this could infuse significant volatility into Sterling.

In the meantime, this morning will also see the publication of Germany’s latest ZEW economic sentiment index. Will a continued improvement in morale help to underpin the euro today?

For USD investors the focus will be on the latest US industrial production figures. While only a mid-tier release, the data could buoy the US dollar if it reports factory output accelerated last month.