Sterling at the mercy of global data releases

By Lauren Buckner

Sterling has dipped this morning in particular against the USD, as the UK expects an announcement later today on the Northern Ireland protocol, after more than a year of negotiations between the UK and the EU. Still rangebound versus the euro and failing to break through 1.14 since early February, forex markets brace themselves for a risky event; the outlook is not a particularly positive one for the Pound given the sell-off of the Pound this morning.

The week ahead is littered with economic releases with particular bias on the EU and the US which leaves Sterling vulnerable to outside influence as we move through this week.

For the Pound, manufacturing PMI Wednesday for February will be very much in the spotlight given recent GDP figures – having narrowly avoided recession with flat economic readings for Q4 2022 released earlier this month. This will be the first snapshot since this release of the economic health for the UK and the likelihood of us hitting recession in the short term. A recession in the UK, and only the UK is widely anticipated amongst economists.

In comparison, it is now believed that the EU will avoid a recession as the European Commission recently updated their predictions of a decline in economic activity to a picture of growth over the course of 2023. Having initially been fearful of surging energy prices the mild winter and a drop in consumption combined has enabled the economy to ‘weather the storm’ in Europe. This leaves scope for further Sterling weakness as we move through the next few months. Thursday’s European Central Bank meeting accounts will give further insight in to the EUs financial and economic health.

Other data of note for Europe this week includes inflation (previously tracking at 8.6pc compared to the UK’s 9.2pc), unemployment levels and German economic indicators – the Euro is likely to dictate this weeks direction with the Pound. Given the recent uplift in sentiment this adds further risk to Sterling’s value.

From across the Atlantic we will also have a flurry of economic data releases which could add further volatility to markets this week. Tuesday’s consumer confidence figure is of particular note.

The team here remain on hand to help and are looking forward to the week ahead culminating in our A Place in the Sun Live show at Manchester Central Convention Centre from Friday to Sunday where those clients still looking or dreaming of their overseas property purchase or even existing clients alike will be welcomed by the currency team in attendance. Please do feel free to touch base with your account manager either by telephone or face to face to discuss ongoing requirements.