Sterling Ends Month On A High

By Simon Eastman

As the month closed off, the pound managed to find some strength off the back of some better-than-expected data releases.

Early doors we saw UK GDP released, which was expected to be poor with tear on year growth dwindling at a meagre 0.2 percent. The monthly figure even worse, at just 0.1 percent and both came out as expected, so nothing for traders to go off. Having spent most of the week on the back foot, the pound was coming from a low point, especially given the peaks we had enjoyed just the week before, but with the release on Nationwide house price data showing a lower than forecast year on year deficit and the monthly figure showing slight growth in the market rather than contraction, the pound started to rally. In addition, total business investment quarter on quarter and year on year, both posted significantly higher readings than expected, with QoQ at 3.3 percent (compared to just 0.7 forecast) and YoY reading 5.8 percent (compared to 3.2 expected).

Meanwhile in Europe, German retail sales came out up on forecasts whilst their unemployment rate was more than twice the expected number. EU consumer process index also failed to meet expectations, with MoM reading 0.3 percent (0.7 expected) and YoY at 5.4 percent (5.5 expected). All the above allowed sterling to rally over half a cent on the day and a full cent better than Thursdays low.

Over in the US on Friday, core personal expenditure data and the purchasing managers index all missed their forecast figures allowing sterling to gain nearly a cent over the day, although late in US trading most of those gains were wiped out, but for those with a dollar requirement, Friday gave some good buying opportunities.

Data Out This Week

We now start a fresh month and quarter, and the raft of monthly figures traders haver to go on start to flow again. This week we have the following to contend with, so those with a currency requirement make sure to speak with one of the team here for some friendly guidance.

Monday – Canada Day, markets shut. Swiss consumer price index. German manufacturing PMI. US manufacturing PMI.

Tuesday – US Independence Day, markets closed. Australian interest rate decision. Germa trade balance. Canadian manufacturing PMI.

Wednesday – German services PMI. EU services PMI. EU producer price index. US factory orders. Federal Reserves latest minutes and speech by Fed member Williams.

Thursday – Aus trade balance. EU retail sales. US employment change and initial jobless claims. Speech by Fed member Logan. US ISM services employment and new orders indices. US ISM services PMI.

Friday – German industrial production. Speech by ECM member De Guindos. US average earnings, unemployment rate and non-farm payroll. Canadian unemployment and average earnings rate. Speech by ECB President Lagarde