Will Sterling/Euro go up or down this week?

Monday 9th May 2016
As you can see from the chart below, after the recent fall in GBP/EUR rates, currently the currency pair seems to be range-bound between 1.26 and 1.27. Currently the rate is stable around the mid-way between these points:

It’s now only 6 weeks until the referendum on Britain’s EU membership, and as the race hots up and more opinion polls are conducted, it’s likely to continue to affect the value of the Pound. In addition to the ongoing ‘Brexit’ debate, there are the usual scheduled data releases. Below I’ve listed the main releases for the coming week.

Of most importance will be the latest UK Industrial and Manufacturing figures, along with the Bank of England’s ‘Super Thursday’ release of it’s inflation report and view on interest rates. See below for a detailed breakdown of what I think will move rates this week.

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What could move exchange rates this week?

Monday 9th May 2016 – Today has been quiet on the data front, however at midnight tonight the British Retail Consortium releases it’s latest Retail Sales figures. These are a good barometer of the economy as a whole, and so could affect the Pound.

Tuesday 10th May 2016 – Today’s data of note is from Germany, the EU’s largest economy. The releases cover Trade Balance figures including Imports and Exports, and could affect GBP/EUR rates.

Wednesday 11th May 2016 – It’s an important day for the Pound, as at 09:30am we will see that latest industrial and manufacturing production figures. These often affect Sterling exchange rates. I’m expecting the monthly figure to be +0.4% growth for industrial, and +0.3% growth for manufacturing. These numbers are already priced into the rate, so anything higher could push the Pound higher, and a lower number would cause GBP exchange rates to fall.  At 3pm today we have a UK GDP estimate from the National Institute of Economic and Social Research. Further afield, a monthly budget statement from the FED could cause volatility for GBP/USD.

Thursday 12th May 2016 – Super Thursday – a very important day for the Pound, as we the Quarterly release of both the Bank of England’s MPC announcement on interest rate and Quantitative Easing, and also the BoE’s quarterly inflation report. I don’t expect any change to rates. Indeed I think all 9 members will vote to leave them on hold. However the inflation report and any comments from the BoE about the future of monetary policy may well affect the Pound. Over in the USA at lunchtime we will see tha latest jobless claims, and import/export numbers.

Friday 13th May 2016
– Unlucky for some, but probably not Sterling, as there are no scheduled releases of note. We do however have EU and German GDP figures that could still affect GBP/EUR rates. We end the week with US Retail Sales.

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