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February 2017

Sterling holds up ahead of big UK data week

Published: Monday 13 February 2017

  • Sterling holds up ahead of big UK data week
  • Janet Yellen holds key for USD
  • Fears of EU collapse not hit Euro yet 
There is a battle raging within the Labour Party over Labour Lords’ plans to delay the triggering of Article 50 in contravention of their party leader’s wishes. But while MP’s faff about over the decision by the UK electorate, the business world and consumers seem to be just getting on with things in a very ‘stiff upper lip’ kind of way. Industrial and manufacturing data released last week supports that, (a more affordable Pound helps) and we believe the UK employment and retail sales figures due this week will do likewise. Sterling is looking quite resilient at this point and could make some gains if the data matches or exceeds the forecasts.
 
The week will bring testimony from the head of the US Federal Reserve (Fed) to the Senate and Congress. What Janet Yellen says will be monitored with keen interest because the markets are waiting for a heads up on the next interest rate hike and Janet Yellen holds the key to that. In turn, Mrs Yellen and her colleagues will have the US consumer and producer inflation, retail sales, industrial production and some housing data all published this week to help them make that decision. The US Dollar remains the pick of the bunch as far as strength goes but, if the US and China are now posting improving data, commodities will strengthen and the USD tends to weaken when that happens.
 
European data this week will be dominated by the (GDP) Gross Domestic Product growth figures, due for release on Tuesday. It is likely that will confirm the 0.5% growth rate we saw in the previous estimate. Away from the data however, Greece can’t agree debt arrangements with the EU and the International Monetary Fund (IMF) and the very existence of the EU has been questioned in a number of quarters; not least by the BBC, which is very unusual for the ‘unbiased’ but blatantly pro-EU broadcaster. I don’t think the markets can quite believe the negative news at this stage because the Euro hasn’t collapsed. If Greece is forced out of the Euro and France votes for Marine Le Pen, that’ll change dramatically.
 
We will have a smattering of Australasian data with weak and inflation data from South Africa but more of those as the week progresses.
 
And cyclists in the Montmagny suburb of northern Paris are bemused by speed bumps that have appeared on their cycle lane. The council says, (as councils do) that it is to protect the cyclists from motorists but the bikers are having to ride on the pavement or in the road to avoid the bumps; putting everyone at more risk. I love these committee decisions that make no sense whatsoever and the feeble attempts to justify them. Money left at the end of a financial year? Need to spend it to justify next year’s budget? Spend it on cycle speed bumps why don’t you!
 

Convinced?

 
A husband arrived home to find his wife in sexy lingerie in the bedroom. She is flushed and looks embarrassed. The husband immediately starts looking around for her lover and finds a bloke standing naked in the bathroom.
“Who the hell are you?” shouts the husband.
The naked guy says, “I’m from Rentokil. We were called because you have a really nasty moth infestation.”
“So why the hell are you naked?” shouts the husband.
The naked guy starts slapping himself all over his body saying “Blimey they’re voracious!”
 

Today's Major Economic Releases
 

Market
BST
Data/Event
Previous
Expected
EUR 07:00 EU: German Wholesale Prices Index
1.2%
0.8%
NZD 21:45 New Zealand: Food Price Index -0.8% -0.8%
 
Daily Currency Analysis by David Johnson