GBP forges on following positive PMI data

Following an 8 month high for Services PMI data, GBP has helped to a good week last week, promoted, too, by CBI figures showing that Q1 2015 growth improved by comparison to Q4 2015. There has been some concern, however, that the pound’s strength may hinder exports. The Greece situation also poses concern still – especially considering that the Greeks are looking for war compensation from the Germans to the tune of €279m. As the UK general election looms next month, uncertainty also abounds and we’ll see GBP fluctuate accordingly. We’ll see CPI index data out tomorrow which, if they avoid decline, will mean we won’t see another interest rate cut. We also have RICS house price data and unemployment figures out later in the week – provided they don’t come in weak then we should see the pound hold its ground.

EUR was under pressure last week with Service data falling early in the week and continued strained relations between Greece and Germany. There also emerged talk of Greece extending the begging bowl to China and/or Russia, and as we see the deadline of 24 April fast approach for Greece to sort out its list of reforms in order to receive €7.2Bn in loans, markets remain on edge. This week we will see industrial production figures and Eurozone trade balance figures out – both of which are expected to come in strong and thus support EUR.

The dollar had a good start to the week with mortgage and home sales data coming well enough to offer strength to the Greenback. Minutes from a FOMC meeting also showed that some members are also looking for a rate hike in June – while some want it to happen early next year – so there exists a difference of opinions with significant outcomes either way. Important data out this week: tomorrow sees retail sales (a good general indicator of economic strength) and PPI numbers – both expected to come in hot. We’ll also see CPI numbers on Friday which, if resoundingly positive, could see USD pushed to fresh highs against competitors.