Following a great week which saw sterling reach four-and-a-half-year highs against the US dollar, the British currency struggled on Friday following disappointing data from the construction industry. Sterling lost ground against both the euro and US dollar following this release and the fall against the US dollar was extended further following the release of US labour data which came out much better than the forecasted levels. However, it should be noted that sterling continues to be close to recent highs against both currencies which suggest that it is still a buying opportunity unless you are convinced sterling has further upside!
A truncated week starts off today with the release of the Purchasing Managers’ Index (PMI) from the services industry. With the services sector making up 70% of the UK’s economy, these figures could well influence sterling’s position should it not reach forecast levels. Thursday’s interest rate decision from the Monetary Policy Committee (MPC) will be the major economic release from the UK, however no change is expected. That being said, with unemployment levels recently falling below the 7%, the figure that was previously touted as a threshold to increase interest rates, and house prices booming, it will be interesting to see what the committee members discussed when the minutes are released in a few weeks’ time. The week draws to a close with the release of manufacturing production data on Friday, and, after exceeding forecasts last month there will be hope that the manufacturing industry can continue this strong run.
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