GBP started last week on the back foot with uncertainty hanging in the air over next week’s election. Nowhere was this more apparent than when the Labour party was seen to take a slight lead and the pound took a knock in value. There was some respite last week, however, in seeing how BoE members were all in favour of keeping interest rates where they are, and Government borrowing was also seen to fall last month, resulting in GBP clipping 1.40 against EUR. This week we have some GDP numbers out tomorrow – important in that it’s predicted that GBP will be sold off with a month- on-month drop is expected. Wednesday will reveal Nationwide’s house price numbers which could spur on a recovery for the pound following what is likely to be poor GDP numbers tomorrow.
Euro’s fortunes were just as mixed last week as Mario Draghi made mention that inflation will normalise to 2% in the near future. Greece, on the other hand, is still posing an issue with one knock-on effect being that confidence in Germany has taken a hit by proxy. EUR has its hands full with Greece whom the concern is with that it can’t repay its €950Billion loan by the 12 May deadline. German and Eurozone manufacturing took a dip below expectation. Data this week includes German CPI on Wednesday which is expected to possibly disappoint, while the powerhaus will also be releasing retail sales and unemployment numbers on Thursday which are expected to come in positively.
Across the Atlantic, with rising oil prices and other poor data seen last week, USD was not looking as strong. Not-so-great economic and jobless data has pushed back the prospect of an interest rate rise, whilst manufacturing this month has also been seen to contract. Home sales figures were also seen to be the worst in almost a year. All of these factors are hampering the chance of an interest rate rise before July. Tomorrow we’ll see consumer confidence data which is expected to beat expectations, and on Wednesday we’ll have GDP data out – very important. Thursday will bring with it initial and continuing jobless claims, and Friday will see ISM manufacturing – so, all in all, a very busy and important week for data in the US. This all means that there could be further implications as to if/when we see an interest rate rise.
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