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Pound remains buoyant with a quiet week ahead

18th September 2017 Market Update

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?? GBP – Last week was nothing short of incredible for the pound. On Tuesday the pound had its first significant piece of data as it was announced that inflation was higher than expected, which saw the pound regain its loses from the previous week. The next substantial release was on Thursday with the Bank of England announcements, whilst the BoE kept everything unchanged the wording and language suggested that the time for an interest rate rise is nearer and that interest rates could rise quicker than previously thought. This sent the pound into overdrive, hitting a one year high against the dollar and had great gains against the euro. Further gains were made throughout Friday as BoE policy maker, Gertjan Vlieghe said he supported raising interest rates in the near future, thus cementing the BoE comments from the day before.

Mark Carney is speaking this afternoon, though unlikely to state anything new. Other than this, Retail Sales on Wednesday is the only piece of data to note for the week.

?? EUR – The pummelling from the pound aside, the euro lost significant ground on Wednesday against the dollar but nothing stands outs as the main contributor to the move. However much of the move was mostly erased by Friday evening.

Quiet week all round it seems, euro zone inflation today is not expected to change, but a higher figure could well give the euro a much needed boost. Manufacturing and services data are due on Friday.

?? USD – In the same boat as the euro for the most of week with the lost ground versus the pound being focused on. Only inflation data was of significance, which in fact was above expectation and would have been received well in the currency market if the UK had not been so highly focused on.

There is a whole host of less significant data from the US with existing homes sales probably the focus on Wednesday which are expected slightly higher. Also on Wednesday, the FOMC interest rate decision and press conference, no change is expected but the press conference will be key for any forward guidance as to when interest rates are expected to rise, this should be significant for the dollar and is likely to react significantly.

 

Key Announcements

?? GBP
18/09/17 – 16:00pm – Mark Carney speech
20/09/17 – 09:30am – Retail Sales

?? EUR
18/09/17 – 10:00am – CPI
22/09/17 – 09:00am – Services PMI – EUR, Manufacturing PMI – EUR

?? USD
20/09/17 – 15:00pm – Existing home sales
20/09/17 – 19:00pm – Fed Interest Rate

 

Our View: We have got used to positive moves for the pound being short lived recently but this time feels different and with the lack of data creating the “no news is good news” scenario, its difficult to see a reason for the pound to falter with little out of Europe and the US this week.

 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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