Is sterling in for a difficult week?

Sterling had a strong end to the week on Friday, with construction data from July coming in considerably better than expected, hitting the highest level in over three years. These figures, coming off the back of strong manufacturing data on Thursday, meant that sterling logged some notable gains at tail end of the week. These gains were extended against the US dollar as worst-than-forecast employment figures out of the US pegged back the nation’s currency. Considering the strong data out of the UK, sterling did not advance as much as it might have done and traded in a fairly narrow range as traders look ahead to this week’s Bank of England inflation report. Wednesday will see the UK central bank Governor “respond to the Chancellor’s request for its assessment of the use of thresholds and forward guidance” during which he could indicate that interest rates will stay at record lows for a prolonged period. Sterling is likely to be under scrutiny and probably pressure for much of this week given the uncertainty surrounding what will be said. We also have services PMI data released today, inflation data on Tuesday and more manufacturing data on Wednesday. It promises to be an interesting week for sterling, so get in touch for the latest rates.