On Friday sterling gave up some of last week’s gains, as, in terms of economic data, it was a quiet end to the week.
Highlighting the effects of a weaker pound, International Airlines Group (IAG), which owns British Airways, stated that the fall in the value of the pound last year cost it €460 million. This highlights just how important a solid currency risk management strategy is, particularly in these volatile times.
Meanwhile, in the latest political news, the Conservatives had an ‘astounding’ victory in the Copeland by-election. Labour has held the Cumbria constituency for over 80 years. This may cause further unrest amongst Labour party members and add to uncertainty in Britain.
Looking to the week ahead, we have the key purchasing manager indexes (PMI) for the manufacturing, construction and the all-important services sector coming up. Should we see the softening in economic data continue, there could be renewed sterling volatility.
The manufacturing PMI will be released on Wednesday, the construction PMI on Thursday and the services PMI on Friday.