GBP ended up having something of a mixed week last week getting off to a strong start with gains against the dollar, but then dipping off when the Bank of England votes on the interest rate decision came in. What we saw in terms of votes was 2 MPC members to 9 voting to keep interest rates on hold for the time being. That 9 strong majority are of the opinion that the UK’s economic performance is by no means strong enough to bring a rate hike forward from March 2015 forecasts. The proof was perhaps in the pudding as we did, in fact, see retail sales numbers come in lower than last year at 1%. There seemed to be something of a slight fight back towards the end of last week, however, with economic growth figures coming in line with expectations at 0.7%. There isn’t too much to coming out the UK this week in terms of data – attention will be on what is happening across the pond.
The Eurozone seemed to show signs of struggling last week despite attempts to rectify problems. We discovered that Mario Draghi and company are now going to try buying covering bonds as an unconventional means to boost the limping economy and prevent another recession. News of this didn’t really seem to help as once it was announced we then saw EUR take a dip against its major counterparts. Eurozone and German services data come in as well – Germany underperforming although the rest of the Eurozone did ok – but this didn’t stop EUR’s depreciation. We’ll see some important data this week by way of German unemployment and inflation data on Thursday, Italian inflation data on Friday, and then very important Eurozone CPI data out as well – if we see some positivity here then it’ll most likely mean an easing of pressure on EUR and thus see the single currency strengthen.
USD also had a mixed week last week although better than expected homes sales figures meant that the dollar saw a nice little jump. Mortgage numbers also came in above expectations – increasing 11.6% against the 5.6% forecast. Tomorrow we will see durable goods numbers and consumer confidence data out a bit later in the day – a positive reading for both will certainly boost the dollar’s performance. GDP figures are then out on Thursday, and on Friday we will see personal expenditure and income numbers – these will be a good gauge of how confident the US citizenry is of the economy’s health and thus their spending power.
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