Quiet data week ahead for the UK/£

PMI data holds the key to early volatility this week..


It was a strong week for the Pound last week gaining each time after an economic release. We saw many of our customers take advantage of the jump, especially because this week sees hardly any data due. That move has proved dividends already, seeing as £ may have crept into overbought territory with it down almost 0.5% across the board today. 

A consolidation period would be nice this week after a solid 6-weeks of major ups and downs for the Pound. The mood on GBP is positive though (for now) in what is supposed to be an 'ugly' period for nation and currency. The PMI data is forecast to show stability for once, so we are not expecting anything major on release, meaning volatility will be coming from elsewhere tomorrow and for the remainder of the week. 

With energy prices easing, the EU/€ could benefit from tomorrow's PMI news. Consensus is expected to show improvement from previous in all areas and so we may see € strength early in the day, before a potential rebound from £. As with GBP, the EUR is also appreciating across the board, being backed by the ECB's firm stance on interest rate policy.

More comments made over the weekend have underscored the ECB's willingness to 'out hike' its major rivals over the coming months. 0.5bp looks to be set until the summer, which will only increase the value of the Euro further near-term. €-$ is now at a 10-month high after collapsing below parity for the first time on record only 4-months ago.  

A continued rally of £-$ looks to be on the cards this week if incoming economic data remains benign enough. There is technical resistance set at 1.25 mid-market, which is only 50pips away from what was achieved last week. The pair has grown a huge 6-cents this month alone, easing the burden on many businesses importing goods using these currencies on SPOT trades.

Thursday's GDP number is the main event this week which is expected to show respectable growth in Q4, but also highlight growth concerns moving forward. Friday's PPI news is also important to the markets and poses risk to USD if the release differs in anyway from the recent CPI figures. 


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