By Tom Arnold
Over the last few weeks Sterling’s situation has been dominated by the high inflation in the UK and the resulting interest rate rises the Bank of England are using to try and bring inflation down. Our regular readers will know that increasing interest rates usually lead to a stronger currency, as yield-seeking investors pile into that currency to take advantage of the higher returns.
Coupled with the stronger Pound we have seen weakness from both the Euro and the US Dollar. On the Euro side the weakness is largely due to the EU being in recession, and on the US side it is the reverse of the UK’s situation with US inflation coming down more readily and hence less of a need for currency-bolstering interest rate rises.
The week ahead is a busy one for the currency markets with plenty of key eco-stats due. UK unemployment, German CPI inflation, US CPI inflation, UK GDP and US Jobless claims are the key ones to watch.
Monday
Bank of England Governor Speech
Tuesday
UK Unemployment Rate
German CPI Inflation
Wednesday
US CPI Inflation
Bank of Canada Interest Rate Decision
UK House Price Survey
Thursday
UK GDP
UK Industrial + Manufacturing Production
EU Industrial Production
US Initial Jobless Claims
US Producer Price Index
Friday
EU Trade Balance
US Consumer Sentiment Index