Sterling at best levels all year.

Good morning and welcome to a new week for the currency markets. Below we will take a look at economic data being released this week, but let’s first take a quick look where the pound is after a good week last week.

Pound to Euro
Rates have steadily climbed up over recent weeks, and last week broke through the 1.15 level for the first time this year. This is much better than at the start of 2009 when this currency pair was almost at parity. The reason for the gain is partly due to a slowly recovering pound, but also due to poor economic data being released from the Eurozone. We could see an interest rate cut in the EU this week that could help keep this run going, however we also have news from the BoE this week, which if poor could wipe out the recent gains.

UK House Prices boost pound
Sterling jumped to its highest level in more than 6 months against the US dollar late in the week – the pound is on track for its biggest monthly gain since 1985. One of the reasons for the rise is renewed hopes that the UK economy is fully on the road to recovery. Also news from nationwide that house prices rose also boosted Sterling. Nationwide reporting a 1.2 percent rise in UK house prices during April 2009.

US Dollar rates very good
So far this month sterling has risen by around 9 percent against the US Dollar, leaving it on course for its biggest monthly rise since March 1985. Any dollar buyers may want to take advantage of some of the best buying levels for some time. Rates are 30 cents higher than only a few months ago.

UK Retail Sector
There was further good news from major British retailer John Lewis, which reported its strongest week of the year so far, with sales up 2 percent last week. John Lewis is always a good barometer of the UK retail sector as a whole, and so this is a good sign of continued recovery.

A UK consumer confidence survey gave mixed signals, however, with an improvement in consumers expectations for their own finances offsetting rising gloom over the economy. Although market participants cheered the rise in UK house prices reported by Nationwide, some analysts warned against getting carried away, arguing the Bank of England still has its work cut out to get a weak economy growing again.

This week we’ll see the central bank annoucne interest rates. As outlined below it’s unlikely rates will be cut, however it’s not out of the question that further Quantitive easing will be announced. This may harm the pound and stem the recent gains.

This Weeks Data
We have various things to look out for this week. A full outline of the major data releases is below. To brefily summarise, for anyone buying or selling Euros then look out on Wednesday for various inflationary measures, and also the interest rate decisions for both the UK and EU on Thursday. It’s unlikely the BoE will move rates from the current 0.5%, however the EU do have scope to cut rates in order to boost the economy.

These decisions may also come with further news for Quantitative Easing for both zones. It’s likely that the Euro may well weaken towards the end of the week, giving better levels for Euro Buyers, but make things worse for those that need to convert funds back to Sterling.

For those clients looking at either buying or selling the US Dollar, then today we have Personal Consumption data and Personal Spending. Friday will also be a key day, as we have Earnings, Unemployment, Spending and most importantly, the Non-Farm Payrolls data. As this is so difficult to forecast, actual results are often way off predictions causing volatility in the value of the USD.

EU – Purchasing Managers Index
UK – Purchasing Managers Index
US – Personal Consumption
US – Personal Spending

Aus – Interest Rate Decision
UK – Consumer Credit
UK – Mortgage Approvals
EU – Unemployment
US – Home Sales

Aus – Gross Domestic Procuct
Ger – Purchasing Managers Index
UK – Purchasing Managers Index
EU – Purchasing Managers Index
US – Unemployment

EU – Retail Sales
UK – Interest Rate Decision
EU – Interest Rate Decision
Can – Interest Rate Decision
US – Jobless Claims

UK – Producer Price Index
UK – Halifax House Prices
Cad – Unemployment
US – Unemployment
US – Non Farm Payrolls.

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