A poor end to the week saw sterling lose almost a cent against the euro on Friday, while holding steady versus the US dollar following a poor Producers’ Price Index (PPI) reading from the States.
The week ahead looks set to contain a number of influential releases, particularly from the Bank of England (BoE). Tuesday sees the release of results from BoE’s recent stress test of eight of Britain’s banks and building societies. This will help to ascertain the banks’ stability and any additional capital requirements, if any, which need to be raised. The failure of banks to pass these tests could see sterling put under early pressure. Tuesday also sees BoE Governor Mark Carney speaking about the central bank’s latest financial stability report. Inflation data will bring a data heavy Tuesday to a close, with a predicted drop to 1.2% due primarily to falls in fuel costs likely to be already priced into the markets.
The release of minutes from the latest interest rate decision could also lead to movement in sterling markets on Wednesday should there be a change in the voting pattern of Monetary Policy Committee members.
Finally, retail sales data on Thursday will provide an insight into consumer spending throughout November, and another bumper figure like in October could see sterling strengthen.