Sterling has continued its rich vein of form over the past week as both sentiment and data continued to nudge the currency higher. The overriding sentiment extended from the previous week, when we saw a catalogue UK data releases exceed expectations – these included inflation, employment and consumer spending data.
This week, data on the whole was generally positive as The Confederation of British Industry (CBI) Industrial Order Expectations saw export orders reach a two-year high, no doubt fuelled by the weakness we have seen in sterling since the Brexit outcome.
However, mortgage approvals has added further fuel to the fire of the well-reported story that we are going to see a drop in UK house prices. The number of mortgages being approved hit an eighteen-month low in July, according to a report by the British Bankers’ Association, dropping by 5% on the month on month basis. As this is already well publicised much of this news has been priced into the currency.
We saw more positive news from the UK yesterday, as the CBI Realised Sales posted a strong gain, well above the market expectations. Many economists are warning that it is still far too early to say that it is going to be plain sailing for the UK as the waters could still be treacherous.
Today we will see the release of the Second Estimate growth data from the UK with current estimates suggesting moderate growth of 0.6%. Any variation away from this figure could spark a reaction from the market.
With the UK August Bank Holiday upon us and the highly anticipated Jackson Hole Symposium to look forward to in the US, there is plenty of scope for higher price volatility over the extended weekend. The Jackson Hole meeting is attended by central bankers, finance ministers, academics, and financial market participants from around the world. It is anticipated that we may receive some clear signposting of US economic policy, particularly as it approaches the back end of the 2016.
If you are looking to buy or sell sterling, we suggest contacting your trader now for live rates, news and currency-purchasing strategies.