Sterling starts the week on the front foot
GBP is currently trading at a 3-week high against a basket of currencies after a supportive end to last week. Renewed interest in the Pound is certainly at play here, but we are unsure if this will last days or weeks until the next headwind takes the headlines. What we do know is that £-€ rates are well supported at 1.16 mid-market, after spending only a few days below this level in the last 3-months.
Last week was certainly a bit 'touch & go' for the Pound, after analysts initially got the market performance correct with GBP v EUR hitting a near 7-week low, before surprising everyone to recover just a day later. Looking ahead, this week proves more difficult to navigate with key UK data scheduled.
First up sees jobs figures for June and the unemployment rate for July, both are expected to be positive once again on release tomorrow morning. Then Wednesday we have inflation numbers for August which are forecast to hit the level that the BoE have set (2.9%). But with July's surprising downside figure, this could go either way and we expect £ to be a bit sensitive on release. We expect the exact same for Friday's retail sales numbers for August, after July's reading missed estimates by a fair margin.
A potential positive for both the UK and £ this week could come via the Prime Minister. Boris Johnson is expected to announce that the Government will relinquish its emergency powers, which would provide clarity to businesses about the upcoming economic conditions. With a less imposing governmental approach, it means business closures like we have seen over the last 16-months have come to an end, providing the economy the best shot at recouping losses quickly.