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Market Update

• Posted by currencies in Bank of England, Currency, Dollar, Economy, EUR, Fed, GBP, Inflation, Rate Cuts, Sterling, UK, Uncategorised
• February 12, 2024
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Pound Sterling has continued to be supported through last week and now faces a heavy week of economic data, which will no doubt play on the minds of The Bank of England regarding future Interest Rate moves. Up first, we have UK Employment Data, particularly the unemployment rate which forecasts currently suggest will have risen slightly from 3.9% to 4%. We then follow this up with Inflation release for both The U.S & The UK, and both figures are set to be contrasting, with US Inflation due to drop again to 3.8%, whereas UK Inflation is due to climb back above 4%. Potentially giving The Bank of England food for thought regarding whether they cut rates or whether they take a different approach. Taking into consideration how the members voted last month, the next vote will be just as key to see what the current divide looks like.

We round the back end of the week up with UK GDP & Retail Sales. Although GDP looks like it will have improved marginally, it should be expected that the Retail Sales figure could be underwhelming again, especially given that December’s figures were extremely low for the festive period and on top of that inflation in general has been climbing again leaving consumers with less disposable income. If these figures were to come out poor as expected, it wouldn’t be a surprise to potentially see some weakness for Sterling, however with inflation rising and the possibility of rates staying at current levels it shouldn’t be ruled out that we see Sterling have some breathing space as well. Either way, this week is an important and volatile 5 days for GBP.

Elsewhere throughout the week we also have a basket of economic releases for The Euro-Zone and US which will also no doubt have an impact on GBP currency pairs. First up with the Euro-Zone we have GDP Growth data for The Euro-Zone on Wednesday, and French Inflation on Friday. Sandwiched in-between these releases is Retail Sales for The US which is set to surprise traders and analysts with a potential drop in sales of over 0.5%. Again, this could pave the way for GBP/USD in particular to benefit and head back towards the 1.27 area.