Since the middle of last year sterling has seen an upward trend gaining ground across the board. The UK economy has been growing and momentum has been with sterling. On Friday we had the release of consumer confidence figures which showed a sharp rise in January from -13 to -7, the best since September 2007, which provided some respite following three months of decline. Sentiments surrounding sterling are generally positive but we can see the pace of sterling strengthening slow following better economic news from Europe and economists are expecting consumer expenditure to drop due to a poor outlook for household incomes, with average earnings growing at a slower pace than inflation.
This week is a busy week for data releases and news. We have the release of the key Purchasing Managers Indices (PMI) for Manufacturing, Construction and Services, starting today with the PMI figures for Manufacturing. This is expected to show a modest increase. Later in the week we have the Monetary Policy Committee rate statement and official bank rate announcement from the Bank of England. Any announcement following this meeting on Wednesday will be closely watched given how close we are to their target for unemployment of 7.0%. Businesses will find out whether borrowing costs will change.
Please don’t assume further sterling strength is a foregone conclusion and miss out on rates not seen for 12 months or more. Get in touch with your trader now for the latest rates and updates.