Sterling had a tough end to last week, losing ground against all its major trade partners. After out-performing the dollar throughout the week, better-than-expected inflation and customer sentiment data out of the US spurred a late rally for the dollar. The euro’s mid-week momentum against sterling continued on Friday although we have seen a bounce up for sterling first thing this morning on concerns over the Ukraine.
The week ahead has limited UK data releases to boost sterling, with the majority of data coming from the US. However, whatever is released will be closely looked at to see if it gives further insight into the state of the UK economy. The release of inflation data from the UK on Tuesday looks to be the main event for sterling. Expectations is that we will see a slight fall to 1.6%. On Wednesday we have the release of key employment data including the unemployment rate which is expected to fall to 7.1% and earnings growth which is expected to be above the inflation rate for the first time since 2009. This could well boost consumer confidence.
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