There has been much uncertainty surrounding the pound over the last month due to the results of the election and Brexit negotiations beginning. Now the Tories finally have a deal in place, the markets can now focus on economic figures and get back to normal.
The pound recovered slightly through Thursday and Friday of last week following comments from BoE's Mark Carney saying that the UK may have to put up interest rates this year.
Moving onto this week, there are some releases that may have an effect on the markets and are worth keeping an eye on if you have a transaction coming up- I would also like to point out that the pound is up at 1.30 against the dollar, which is the highest we have seen since 2016 so it may be worth looking at our various contract options if you are trading this currency pair.
On Monday morning, the UK will release PMI (Purchasing Manager's Index) manufacturing data which is expected to come in weaker than last month- this is based on five major indicators, new orders, inventory levels, production, supplier deliveries and the employment environment - this isn't actually our manufacturing data (as that comes out later in the week). Later on Monday, the US figures coming out all expected strong, these include construction spending, ISM new orders, and ISM manufacturing.
On Wednesday, the UK will releases services PMI data, which is also expected to come in weaker than previous, however, this should be counteracted against the euro as the eurozone will be releasing weaker than previous retail sales figures. My only concern with this, is that the eurozone economy has actually been performing pretty well recently so there is a chance they underestimated this release and it may come in slightly better than expected. Later on Wednesday, the FOMC minutes will be released which will give us an insight into when the Fed thinks the next interest rate hike will be due and how the economy is performing.
Thursday will be an interesting day for both the euro and the dollar as the ECB will release their account of the policy meeting- as Mario Draghi's recent comments were apparently taken out of context- the markets will look for clarity in this release and could end up moving the Euro. The US will be releasing jobless claims and trade balance figures, both expected stronger than previous, which could strengthen the dollar over Thursday afternoon.
Friday will be the day to watch for sterling exchange rates, The UK will release a host of data including Industrial and Manufacturing Production (expected strong) - and UK trade balance data, which is expected slightly weaker than last month. Friday morning may provide some decent buying opportunities if selling sterling. Later on Friday the US will release their notoriously non-predictable non-farm payrolls data, which so far is expected stronger, but as we all know, never comes out as expected - this will add much volatility to the US dollar.