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Potentially a positive week for the Pound

Published: Monday 16 April 2018

  • Sterling still strong
  • Airstrikes haven’t moved US Dollar
  • Big week for economic data – currency volatility ahead?
​​By David Johnson

Well, I hope you had some of that spring weather over the weekend. It wasn’t quite tropical in the UK, but it did feel like a welcome relief from the persistent rain. And if we feel good, I kind of feel the England Women’s netball team must feel like that multiplied by a hundred. A last minute goal clinched the gold medal against Australia by a single point and we have never won that title at the Commonwealth Games before. A fantastic game and an awesome result.
Potentially a positive week for the Pound
I don’t think the medals table had anything to do with Sterling’s strength over the last week, but the Pound is stronger nonetheless. Its mettle will be tested this week as we get a barrage of UK consumer-centric data and the ongoing stories we all know about.  There isn’t a lot to talk about today but we’ll get earnings and employment data tomorrow, inflation on Wednesday and retail sales on Thursday. In general, the forecasts are quite positive. The unemployment rate doesn’t have much more room to improve, but a step up in retail sales is likely (wellies and raincoats being bought, I would guess) and it is likely inflation will stay around the 2.7% level; above target but not too troubling to the Bank of England (BoE). If all is as expected, the Pound should maintain its current levels at $1.42 and €1.15.
Markets seem calmer in response to political pressures
The very precise nature of the strikes in Syria and the measured speeches from the US and French Presidents and the UK Prime Minister seem to have toned down market reaction to the events. Any escalation by Russia might change that but, aside from Putin baring his chest and thumping it, there hasn’t been a response as yet. 
US Dollar weak
The US Dollar, which tends to strengthen at times of heighted geo-political tension, has actually weakened against the Pound and Euro. So the markets are not behaving entirely rationally. We shall see if that changes as and when the Russians start shutting down computer systems and gas pipelines. There are also a few US data events this week.  We will see US retail sales, the manufacturing and industrial production statistics and the publication of the Beige Book; a view of the US economy as seen by the regional Federal Reserve offices.
Chinese data could have an impact on commodity currencies
What may also affect the USD and Asian and Australasian currencies will be the Chinese Gross Domestic Product (GDP) data. This is forecast to be very poor in comparison with previous months and that ought to weaken local currencies and those of China’s suppliers, like Australia and New Zealand, as well as commodity producers like Canada and South Africa.
Big news for Canadian Dollar this week
And speaking of Canada, Friday will see the release of what are expected to be positive retail sales and inflation data from Canada. We will also get an interest rate decision from the Bank of Canada. No change is expected, but the tone of their statement may have an impact.

The undead: more than a Romanian legend
And I love the story of Romanian, Constantin Reliu, who returned home after 20 years working abroad to find his wife had registered him as dead. That is bad enough, but the 63 year old approached the court to have himself reinstated as ‘alive’, only to have his claim rejected. Apparently, his claim is too late. So, he is in fact one of the living dead. That must be a nightmare, but it is also strangely cool, too.
Say it with flowers – carefully…

Bob was not the easiest guy in the world to get along with. He knew that. So when his wedding anniversary came around, he wanted his wife to know how much he appreciated the fact that she had tolerated his ways for the past 20 years.

He ordered flowers and told the florist to enclose a card with a suitable message. It read, ‘Thank you for putting up with me so long’.

When Bob got home, rather than the warm welcome he was expecting, his wife was furious. 'Just where in hell do you think you’re going, then?' she raged.

He spotted the flowers on the kitchen worktop. They were untouched, other than the card, which had been taken out of the envelope.

“I thought you’d like the flowers,” he said, as he picked up the card.

His wife snatched it from him and read the card aloud just as the florist had written it: 'Thanks for putting up with me. So long!'

Today's Major Economic Releases

Market BST Data/Event Previous Expected
USD 13:30 US: Retail Sales -0.1% 0.4%
USD 13:30 US: Core Retail Sales 0.2% 0.2%
USD 13:30 US: Empire State Manufacturing Index 22.5 19.8
GBP 14:30 US: Conference Board Leading Index 0.0% 0.1%
USD 15:00 US: Business Inventories 0.6% 0.6%

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