Sterling was mixed on Monday as the currency braced for an eventful week ahead, and on the back of muted consumer spending data.
At 11:30 GMT, GBP/USD edged up 0.14% to 1.3215
Credit card company Visa released figures showing a 0.3% YOY increase in consumer spending in August, the fastest pace since April. Visa said the rise in spending was due to the Brexit-hit pound, which led to a greater amount of staycations - people holidaying in the UK instead of travelling abroad.
Visa also noted that 2017 looks to be the weakest for consumer spending for four years.
The week ahead looks to be crucial for the pound: parliamentary vote on the Repeal bill. inflation forecasts, employment data and the meeting of the Bank of England’s Monetary Policy Committee run from Monday to Thursday respectively.
The UK Parliament will vote on the EU withdrawal bill on Monday evening. The repeal bill will write current EU legislation into UK law in time for March 2019, when the UK is scheduled to exit the European Union.
The bill has been plagued by controversy with some Conservative backbenchers naming it an ‘astonishing monstrosity’ and the opposition Labour Party calling it a ‘power grab’. This will be the biggest test of Prime Minister Theresa May’s parliamentary strength since the election result weakened the Conservative’s position in parliament.
Investors will be looking to the Consumer Price Index (CPI) released on Tuesday for UK inflation. The forecast is 2.8%, higher than the Bank of England’s desired rate of 2%. Employment and earnings figures will be released on Wednesday all of which will give the Bank of England food for thought ahead of Thursday’s MPC interest rate decision.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.24% at 91.53.
The dollar picked up from Friday’s 22-month low as Hurricane Irma was downgraded to Category 1 as it made landfall. The recent hurricane damage looks to affect the US economy in the coming quarter, and as such President Donald Trump said on Saturday that he will ask Congress to expedite the tax code overhaul. .
The euro dipped on Monday following comments from European Central Bank Executive Board member Benoit Coeure on unwarranted tightening of monetary policy as a result of external factors impacting upon euro strength.
The single currency slipped 0.38%%, with EUR/GBP at 0.9086.
The pound made significant gains on safe haven currencies as North Korean tensions cooled, leading to the yen, swissie and gold to lose some of their shine. GBP/JPY was up 0.82% at 143.46. GBP/CHF was 1.2550, up 0.75%.
A mixed bag against the commodity currencies, the pound was up 0.20% against the Australian dollar GBP/AUD was 1.6418.
GBP/NZD was flat at 1.8170, while GBP/CAD was down 0.24% to 1.6004.