By Tom Arnold
The Pound reached new two-year highs last week, as the lack of Covid restrictions helped the UK economy, along with the December interest rate rise and likely future interest rate rises (to curb inflation) also giving exchange rates a boost.
However sterling is extremely vulnerable to political issues – will there be a change of Prime Minister in the short term? The report into lockdown parties at the heart of government is due to be released in the coming days. Will Boris live to fight another day? If not, we could see the Pound suffer as what was not very long ago a stable government with a large majority, could give way to a power vacuum and inevitable calls for a General Election from opposition benches.
The February interest rate rise in the UK is also far from certain, but the likelihood has helped the Pound stay strong. With so much coming up in the next few weeks, both politically and economically, and the Pound having hovered at its current levels for much of January, which way will the next big move be for exchange rates? We are probably about to find out, so stay in touch with A Place in the Sun Currency if you would like us to update you as things develop.
Data this week
Monday
EU Manufacturing PMI
EU Services PMI
UK Manufacturing PMI
UK Services PMI
US Manufacturing PMI
US Services PMI
Tuesday
Australian CPI Inflation
US House Price Index
US Consumer Confidence
Wednesday
US New Home Sales
Canadian Monetary Policy Statement inc Interest Rate Decision
US Fed Monetary Policy Statement inc Interest Rate Decision
NZ CPI Inflation
Thursday
US Durable Goods Orders
US GDP
US Initial Jobless Claims
Friday
German GDP
EU Consumer Confidence