What could impact sterling exchange rates this week?

As we return after the Easter break sterling has had a relatively calm start to the working week but what should I be looking out for if I need to trade sterling this week?

Today, as market movements suggest, has been relatively light on the data front with little or no data of note. As a result sterling has traded between 1.1410 and 1.1440 against the Euro and 1.4025 and 1.4088 against the US dollar – a relatively small range. This trend is likely to continue for the rest of the afternoon – although anyone with an interest in the US dollar should look out for a speech from Fed member Lael Brainard this afternoon.

Heading into Wednesday and the focus for the pound will be UK PMI construction figures released at 09:30. This is forecast to show a slight decline from the previous month, down to 50.8 from 51.4. If as forecast this could set the tone for the day with sterling likely to trend downwards. For those looking at the Euro look out for inflation figures at 10:00.

On Thursday UK data is light with only Markit services PMI at 09:30 whereas there is plenty to focus on in the Euro Zone. This starts in the form of Retail Sales followed by Producer Price Index figures. Retail sales are forecast to post a strong increase from -0.1% to 0.6% and if as expected the Euro could strengthen on Thursday.

To finish off the week the main focus will be from across the pond with the important monthly non-farm payroll release. This is a key indicator as to how the US economy is performing and is one to look out for. Forecasts are for a significantly lower reading than March which would normally cause the US dollar to weaken as a result.

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