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Big week ahead for UK data

• Posted by Shyam Gokani in Bank of England, Brexit, Currency, Dollar, Economy, EUR, GBP, Mark Carney, Sterling, UK
• May 16, 2016
• No Comments

Sterling recovered from a near three-week low against the dollar this morning as comments by leading Brexit campaigner Boris Johnson added to an increasingly fraught debate over Britain’s membership of the European Union.

With most major currencies steady, the pound traded less than 10 ticks away from the low of $1.4340 it hit after a batch of stronger economic data out of the United States on Friday boosted the dollar.

Compared to the previous close, it dipped 0.1 against both the euro and the dollar to 78.85 pence per euro and $1.4346.

Former London Mayor Johnson, whose joining of the “Out” campaign for June’s referendum drove sterling to as low as $1.38 in February, has hit the headlines several times since starting a battle bus campaign last week.

He said in an interview over the weekend that the EU was following the path of Adolf Hitler and Napoleon by trying to create a European super state, drawing criticism from one political opponent that he had “lost his moral compass”.

Jacob Rees-Mogg, a Brexit-backing Conservative member of the parliamentary committee which scrutinises the Bank of England, also said that Governor Mark Carney should be fired after warning last week the vote was a large risk to growth.

Any swings in the polls could be the trigger for the next move. It hasn’t really moved since Friday.

The pound has recovered solidly since falling 7 percent in the first months of the referendum campaign, but it dipped after Carney’s warning on Thursday that the June 23 poll was the most significant risk to the Bank’s growth forecasts.

In its quarterly inflation report, the BoE said sterling could weaken and unemployment would probably rise after a vote to leave the EU. Carney said that a “technical recession” was possible but was not the most likely scenario.

Bank of England Governor Mark Carney denied on Sunday that he had compromised the central bank’s independence by warning of the short-run costs of leaving the European Union, after criticism from “Out” campaigners.

Last week the BoE said Britain risked slower growth, higher inflation and even recession if voters backed leaving the EU in a referendum on June 23, prompting criticism that the BoE was biased and itself destabilising markets.

Prime Minister David Cameron and the leaders of Britain’s other main political parties, as well as international bodies such as the IMF, all support Britain staying in the EU.

This week the main focus will be on the Inflation data in the UK Tuesday morning, with Unemployment and jobs data on Wednesday and finally the Retail Sales on Thursday. All this data will give a good indication of which way the UK economy is heading.

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