Sterling fell badly across the board on Friday as manufacturing data disappointed. Sterling fell sharply against the euro, hitting a four-week low before finding some support and recovering slightly. Performance against the US dollar was equally as poor, with sterling falling to a fresh seven-week low despite poor labour data from the states. The week ahead provides plenty of opportunity for sterling movement with a raft of key data being released plus the latest Bank of England meeting announcement on Thursday. Today and tomorrow sees the release of the Purchasing Manager Indices (PMI) for the construction and services industry. These will hopefully show more robust growth than last week’s manufacturing figures, particularly within the services industry, which makes up such a large part of the UK economy. If they don’t we could see sterling undermined further.
Following a disappointing manufacturing production figure last month, the forecast for June is expected to have shown an increased output again. Thursday’s announcement of the official interest rate is likely to be something of a non-event, with the Bank of England expected to maintain this at 0.5% although there is a belief that when the minutes are released later in the month we could see increasing pressure from certain members to start increasing interest rates. We enter an important week for sterling as Friday’s events surprised many and showed that sterling’s supporters can be a fickle bunch if the data is not supportive of sterling.