A big week ahead with GBP poised…
Poised for what? would be the obvious question. Well almost a month has passed since we saw the ECB keep rates and all other policies unchanged and we saw the Euro strengthen and GBP/EUR fall into the 1.19’s. In the same timeframe we saw GBP/USD fall into the 1.64’s as the Ukrainian crisis benefited the safe haven currency.
However, we start this week of heavy data with GBP back around 1.21 vs Euro and 1.66 vs US Dollar. One major reason for this is UK retailing figures smashing expectations last week. Another, however, is expectations that the ECB will further reduce interest rates/introduce further stimulus in this Thursday’s interest rate meeting.
With US data continuing to be broadly positive the market will be watching the ISM purchasing surveys on Tuesday and Thursday but mainly focusing on the all important non-farm payroll/unemployment data on Friday. It is likely that positive US data will unfold and be considered globally risk positive and thus weaken USD as the ‘risk on’ scenario will see USD sold as investors have the confidence to move to riskier currencies/investments.
Despite the heavy data week, today will be relatively quiet, it all really kicks off with tomorrow’s Eurozone Consumer Price Index.