Poor UK data leaves pound weaker

After a mixed day of trading the GBP/EUR exchange rate managed to just about hold €1.17 (although this was largely due to euro weakness).

Less than impressive UK data left the pound weaker against the US dollar on Friday, and a general risk-off mood failed to limit Sterling’s losses against the Australian, New Zealand and Canadian dollars. The pound did hold firm against the euro however, with GBP/EUR managing to hold above the €1.1700 level.

GBP/USD dropped from $1.2473 to $1.2369 while GBP/NZD dipped from NZ$1.7908 to NZ$1.7795 and GBP/CAD slumped from C$1.6715 to C$1.6557.

GBP/AUD closed the week at AU$1.6500 but jumped by 0.5% on Monday as investors responded to the latest Australian housing data.

What’s going to be moving the currency market this week? Keep scrolling to find out...

What’s been happening?

There were a number of UK reports on the data calendar on Friday, but unfortunately for the pound none of them offered much cause for cheer.

Both industrial and manufacturing production unexpectedly declined in February (by -0.7% and -0.1% respectively) while construction output dropped -1.7% on the month and slowed to 0.5% on the year.

The UK’s trade deficit also widened and the NIESR GDP estimate for March signalled a slowing in growth in the first quarter.

Demand for the pound also eased as Bank of England (BoE) Governor Mark Carney gave no indication that UK interest rates would be increased in the near future.

Meanwhile, the US airstrike on a Syrian military base limited demand for higher-risk currencies but sent oil prices to a new one-month high (boosting the Canadian dollar in the process).

The US dollar closed out the week in a broadly stronger position as the US unemployment rate fell to its lowest level since 2007.

What’s coming up?

Today we’ve got news from the Eurozone, in the form of the Sentix investor confidence gauge, and a speech from Federal Reserve chairwoman Janet Yellen.

If the Eurozone’s confidence index shows the improvement in sentiment forecast by economists the GBP/EUR exchange rate could be pressured slightly lower.

Similarly, any hints from Yellen that the Fed could increase the number of planned interest rate hikes in 2017 would put pressure on GBP/USD.

The first bit of exciting UK news, the nation’s inflation report for March, is due out tomorrow.

At the moment the consumer price index is expected to come in at 0.3% on the month and 2.3% on the year. Accelerating consumer price pressures might force the Bank of England (BoE) to reconsider its current wait-and-see stance on interest rates, so a stronger rate of inflation could send the pound higher.

We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers.

Phil McHugh,
Trading Floor Manager

Phil looks after our large corporate clients, providing dealing and hedging services whilst also helping to manage Currencies Direct overall market exposure.