A mixed bag of economic data pushed sterling higher against its major peers on Friday, with upbeat foreign investment inflow at the end of 2016 offsetting another set of warning signs on household spending. The data showed that households in the UK had run down their savings to a record low in late 2016 due to a fall in their spending power. UK growth was unrevised at 0.7% and, as expected, the annualised figure was revised down by 0.1% to 1.9%.
European Commission President Donald Tusk stated last week that he thought it would be possible to agree a new trade deal between the UK and the EU within the short two-year timeframe as long as both sides were committed to come to an agreement.
What also supported sterling was that the Bank of England’s monetary policy committee member Ian McCafferty hinted that he may also vote for an interest rate hike over the coming months, aligning himself with Kristen Forbes. The BoE, however, played down these reports.
A busy week on the economic data front as we have the purchasing managers’ indices for manufacturing, construction and services released on the first three days of the week. The forecast is for no change from the actuals for February.
Then on Friday we have a raft of UK manufacturing and industrial production data and the trade balance, all for February, as well as a speech by the Governor of the Bank of England.