This morning at 9:30am the latest manufacturing and production data was released for the UK. In the past few months UK data has been up and down, with some instances of data coming in much lower than expected, that was not the case this time. Although there has been little reaction in the rate, with Sterling rising very slightly against the Euro and dropping a little against the US Dollar.

There is so much pressure on Sterling at the moment if the data had been poor we could have seen the GBP/EUR rate potentially dropping below the 1.10 level.

The currency markets overreact through the summer break as there is less volume being traded due to investors being away. Therefore when something that isn’t expected happens you will see major swings across the market.

On a more positive note the UK economy has been one of the only positives for Sterling since the Brexit vote and there have been shocks. Analysts have been negative about the UK’s prospects on several occasions and any negative data or news is being pounced on at times.

Quiet tomorrow before Inflation next week

The data this morning finished off the key data releases for the UK this week. However, next week there could be major volatility for Pound Sterling rates. Inflation is one of the key drivers of GBP exchange rates at the moment and the latest Consumer Price Index figures will be provided next week.

If there is an indication that the inflation rate will move above 3% that could cause the Bank of England to make a change to interest rates. A positive interest rate movement could see the GBP/EUR rate move back towards the 1.15 level, which would certainly be very positive for those buying Euros with Pounds.

Next week there will also be the equivalent data released for the Eurozone so if there could be more downward pressure on Sterling if form is anything to go by. However, in my opinion as a optimist, there could be some positive Sterling movement just on the horizon.