Sterling soared on Friday on the back of comments from the Bank of England (BoE) Chancellor Mark Carney who indicated that the Bank of England could raise interest rates by the end of the year. During the course of the week sterling gained nearly two cents against the euro and the US dollar, hitting on Friday a 5-year high against the US dollar and a 19-month high against the euro. It also strengthened against most other currencies.
The week ahead sees a number of economic data releases from the UK which could add further momentum to sterling strength. It starts with inflation data on Tuesday. After rising unexpectedly through April, this is expected to have fallen again in May. Wednesday sees the release of minutes from the latest meeting of the Monetary Policy Committee, where details on policy makers thoughts on interest rate rises could see sterling strengthen further. Retail sales data on Friday is expected to show negative growth – however, if it exceeds expectations as it did last month, we could see sterling gain further momentum.