By Ashley Finill
As we enter the month of May and come back from the bank holiday weekend the currency markets are back open for business. Sterling will be hoping to start the month where it left off as on Friday, as it gained some ground back on the Euro due to worse than expected EU Data on Friday morning gave the pound a much-needed lift and a good opportunity for Euro buyers. The rise was only marginal though, as Sterling Euro is still trading within the same 2 cent range that it has been for most of 2023. As we come into Tuesday morning Sterling has already started to fall off against the Euro dropping just under half a cent since the markets re-opened. With the start of a new month, comes a raft of economic data which will have an effect on the currency market throughout May. Inflation figures will be released across the board along with interest rate decisions from global banking committees. As we have already seen this year, Sterling has been the most sensitive to data releases, mainly due to being the worst performing economy in the G7 at present. This has meant the Bank of England has had to step in on multiple occasions raising interest rates in the UK to the record highs to help curb the 40- year high inflation rate.
Striking continues to disrupt Services
As the cost-of-living crisis continues to grip the UK, inflation is still in doubles figures, with the economy not recovering as quickly as expected. The high inflation rate has seen public sectors turning to the government for support with pay increase demands rife from unions across the emergency services, tax officers, postal workers, and train drivers to name a few. The government have managed to appease just a few sectors but the NHS and train workers amongst others are still planning strike action throughout this month, bringing disruption to services once again. This will pile on the pressure for the PM to act more decisively and bring a resolution to the striking. More money in workers’ pockets ideally means more spending, which ideally would help the economy in the UK albeit risking higher inflation. Retail sales figures fell last month by 0.8% which shows that money has been getting tighter, with less spending likely due to the cost of living crisis and as a result, investors have been less keen on the pound with losses seen on the euro and dollar when the retail sales figures were released towards the end of last month. As mentioned already this new month brings a refresh of data releases which will certainly affect the currency markets.
Data today and this week
As mentioned, a new month brings new data releases from across the globe which will impact the currency markets. A relatively quiet start to the week, however today. At 9am, the EU release consumer prices which could bring some volatility with it in the early morning trading. Overnight, New Zealand release their unemployment rate. Into Wednesday morning the unemployment rate is released in the EU at 9am. Into Wednesday afternoon the US release ADP Employment Change at 12.15pm. Later at 1.45pm the US also release PMI data and in the evening at 6pm the Federal Reserve will announce their interest rate decision. They are expected to increase the interest rate by 25 basis points from 5%to 5.25%. Overnight on Thursday Australia release trade balance figures at 1.30am. Into Thursday, the ECB announce their monetary policy decision statement which is likely to move Euro markets. A press conference will also be held by the ECB following the decision. On Thursday afternoon the US post jobless claims and trade balance figures. Finishing the week off on Friday, in the morning the EU release retail sales figures at 9am. Into the afternoon the US release the unemployment rate in the country at 12.30pm, as does Canada at the same time.