• BoE meeting key focal point for the week
  • Euro set for quiet week
  • All eyes on US as Irma makes landfall

Sterling gains on wider market uncertainty

The pound performed well on Friday, gaining 0.75% against the euro and dollar. Positive UK manufacturing and industrial output data, combined with disappointing German export data as well as uncertainty ahead of Hurricane Irma in the US, allowed the pound room to breathe.

The coming week could provide the currency with some more support. However, the Bank of England (BoE) vote is likely to be the key focus of the week. Tomorrow we have the release of UK CPI inflation data, which is predicted to rise by 0.2% to 2.8%. With levels remaining above the central bank’s 2% target this may spark more pressure on the Bank of England to look at raising rates sooner rather than later. Wednesday brings ILO unemployment and average weekly earnings, which look set to remain stable or rise from prior. This again could provide the currency with more support.

Despite this, the key focus will be the BoE vote on Thursday. While a 7-2 vote to keep rates unchanged is predicted, investors will be paying close attention to comments from Mark Carney to try and gauge the bank’s ongoing sentiment.

Euro investors disappointed ahead of quiet week

The euro left investors disappointed on Friday, losing nearly three quarters of a percent against the pound and trading broadly flat against the dollar. German exports rose significantly less than expected on Friday, up 3% as opposed to the +4% that was expected. Combined with the ongoing uncertainty following the recent ECB meeting, this left the currency struggling against the strong pound.

The coming week looks likely to be relatively quiet for the euro, with a limited number of releases. Wednesday brings the release of German inflation numbers, which look set to remain stable at 1.8%. However, French inflation on Thursday does look set to rise by 1%, which could provide some support for the currency. 

Greenback struggles as Irma strikes

The greenback struggled on Friday, losing three quarters of a percent against the pound while trading broadly flat against the euro. A disappointing wholesale sales number, combined with the looming threat of Hurricane Irma and disappointing employment data last week, left the greenback struggling.

The coming week looks likely to be particularly quiet for the dollar, with a limited number of data releases. Tomorrow we have the release of JOLTS job openings and Wednesday brings the release of PPI figures, which are expected to rise by 0.6%. Despite this the key the focus will be CPI inflation on Thursday. Inflation is expected to rise by 0.2% to 0.3% for August, which may provide the greenback with some support. However, uncertainty following the strike from Hurricane Irma could leave investors cautious of the dollar.

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