GBP firmly on the back foot

The pound, having enjoyed riding a crest of positivity for a number of weeks prior, was firmly on the back foot last week when it hit a 6 week low against EUR. Even positive retail sales and CPI had failed to lift GBP above the single currency which had, up until then, been very much in the doldrums given all the issues coming out of Athens. It’s a quiet week for the pound this week – besides quarter‐onquarter GDP estimate out on Friday. One thing that is playing on the mind of investors are the echoing words of concerned MPC member, Kristin Forbes, who stated recently that if raising interest rates is left too long, it may hamper the UK’s economic recovery as the hike needs to come into effect before inflation reaches the BoE’s 2% target.

But all eyes were on the euro last week, particularly following Germany’s endorsement of Greece’s new bailout package. There was also news that French and German manufacturing were on the up. With Europe on holiday this week, we’ll only really see German ifo business climate data out which also takes into account the wider Eurozone performance as well.

In the States, USD dropped as speculation over the interest rates receded, inflation was seen to rise a mere 0.1%, FOMC minutes showed there wasn’t enough satisfaction with the current “policy firming” conditions, and unemployment was seen to increase. This week we’ll see consumer confidence data and monthly durable goods orders.