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May 2017

Sterling rebounds from fall after Bank of England (BoE) comments

Published: Monday 15 May 2017

  • Sterling rebounds from fall after Bank of England (BoE) comments
  • USD weaker on Friday’s data and oil price rise
By David Johnson
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The Pound has started the week on the front foot. Traders appear to have got their profit taking out of the way after the Bank of England’s rather negative statement. Last week’s soft Industrial and Manufacturing sector data also weighed on the Pound for a day or so. This week brings UK Retail Inflation as well as Employment data and then Retail Sales numbers. The forecasts for these are very mixed, so expect volatility around the announcements on Tuesday, Wednesday and Thursday respectively. Sterling is still trapped below USD 1.30 and has dipped to around EUR 1.18.
 
Other than confirmatory Gross Domestic Product (GDP) numbers and the minutes from the last European Central Bank (ECB) meeting, there isn’t a great deal of Eurozone data this week. The New French President needs to get his MPs selected; and there was an election in Germany’s North Rhine-Westphalia over the weekend; Angela Merkel’s Christian Democratic Union (CDU) party unseated the ruling Social Democratic Party (SDP) in the results. That may or may not be significant as we look forward to Germany’s General Election in September, but the Euro will have benefitted from the confidence it brings that Angela Markel may remain as Chancellor after the September vote. That would also be good for UK Brexit negotiators who see Angela Merkel as being a steadying influence over the worst excesses of the anti-Brexit rhetoric.
 
A rise in oil prices allied to poor data on Friday has weakened the US Dollar over the weekend after further Organization of the Petroleum Exporting Countries (OPEC) agreements to restrict production. That was kind of counterbalanced by a Federal Reserve member suggesting two interest rate hikes would come from the Federal Reserve this year. This week brings US Housing data and Industrial Production numbers but it is light on data other than these. That doesn’t mean the USD will be flat…it never is. The weakness in the USD and the slight improvement in the Euro has allowed the EUR-USD rate to push back up to $1.09
 
Overnight news that China’s Inflation data was a little soft caused only a little volatility in the currencies of China’s suppliers. The Aussie and Kiwi Dollars are largely unchanged, but we will get the minutes from the last Reserve Bank of Australia (RBA) board meeting overnight tonight; and a smattering of Australian and New Zealand data throughout the week.
 
The latter part of the week brings Canadian Retail and Inflation data, all of which is forecast to be rather downbeat. Those selling Canadian Dollars may wish to mitigate the risk of CAD weakness by trading earlier or placing Stop Loss orders.
 
And I think we all know that Britain is never going to win the Eurovision Song Contest again. However, I loved Lucie Jones’s view on the matter. “All I wanted was to not come last and I came 15th, so I did really well.” Brexit watchers noticed that neither Germany nor France gave her song a single point. I didn’t watch the show but did Greece and Cyprus give each other 12 points, by any chance? Can I suggest a name change for next year; how about “Euro-division Song Contest”?

 

Joan Rivers one liners

 
I've had so much plastic surgery, when I die, they will donate my body to Tupperware.

Don't talk to me about Valentine's Day. At my age, an affair of the heart is a bypass.

People say that money is not the key to happiness, but I always figured if you have enough money, you can have a key made.

The first time I see a jogger smiling, I'll consider it.

I got a waterbed, but my husband stocked it with trout. 

Elizabeth Taylor is so fat, she puts mayonnaise on aspirin. 

I wish I had a twin so I could know what I'd look like without plastic surgery.  
 
 
For more information, infographics and the latest currency insights, visit www.halofinancial.com/news
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