The pound has been holding on for dear life over the past few months as Brexit headlines have made it the most volatile currency in the world. Since Article 50 was invoked, we saw that the pound actually bounced slightly on the certainty and has managed to hold on to its gains over the last week.
As we saw last week, Friday was going to be the most important day as we were expecting a host of UK economic data that was all expected to be pretty strong...unfortunately, it didn't turn out this way.
Industrial and manufacturing data both came out weaker than expected. One reason for the fall in industrial output numbers was that the UK public has used less gas and electricity recently, perhaps due to the wonderful weather we been having here!
BoE Governor, Mark Carney also voiced his opinion on Friday about Brexit negotiations and insisted on the UK and EU having an open financial system that allows money to flow in and out of the UK & Europe without going down the route of protectionism of banking rules.
It seems that the start of 2017 has been slow for the UK with weaker economic figures being released, inflation figures this Tuesday will give us an indication on if the UK will need to make interest rate hikes anytime soon, and this could potentially strengthen the pound slightly. But all in all, I believe the strength (or weakness) of the pound will be directly correlated to the Brexit negotiations. This week will be pretty clear of market data so I would suggest that the main focus is the inflation figures on Tuesday and the employment and earnings figures for the UK on Wednesday. Remember, if inflation is going up, but wages aren't, then that isn't a good thing for an economy!