The pound, despite a weaker than expected US employment reading, gave up pretty much all of its gains against the US dollar last week.
A significant reason for this move was the dollar strengthening when Cleveland Federal Reserve President Loretta Mester said in an interview with Fox Business that the December jobs report was ‘very decent’. She went on to say that three Fed rate hikes in 2017 would be ‘reasonable’.
There’s not much coming up in terms of economic data this week. That doesn’t mean, though, that we won’t see any sterling volatility because it’s mainly been political developments that have been driving the currency recently, not economic data. There are also rumours that the Supreme Court will announce its decision regarding the triggering of Article 50.
Looking at upcoming data for this week, following the profit warning issued by fashion retailer Next at the start of this month, the BRC retail sales monitor will be of importance.
The only major data release in the UK this week is manufacturing data on Wednesday. With sterling weaker yet again and a disappointing manufacturing figure last month, we’re likely to see the figure rebound. If not, the pound could suffer again.