The Pound has made some small inroads to start the week after a very heavy week in British politics and of course after the speech from UK Prime Minster Theresa May last Friday.
The Pound saw a very muted reaction to that speech and actually took losses against most of the major currencies. The speech itself, which is still being talked about, made reference to an “ambitious economic partnership” between Britain and the EU and is supposed to signal to the EU exactly what Britain is looking for in terms of a future trade arrangement. The EU are expected to respond this week setting out their terms of future trade and a strong response that is less accommodating to Theresa May’s objectives could see the Pound come under pressure. Expect considerable more volatility for GBP EUR as the Brexit negotiations continue and the rates remain equally driven by political developments.
UK Purchasing Managers Index data for the services sector was released this morning which arrived stronger than expected and showed an improvement in February over the month prior and helped lend support to the Pound.
UK house price data is released on Wednesday and should help create some direction for the Pound. Construction and housing are two sectors that the markets are keeping a close eye on and any weakness in these sectors in particular could put pressure on Sterling exchange rates. Friday however sees UK manufacturing and production numbers which could give a good snapshot as the heath of these sectors. A positive number could see the Pound rally.
EU Gross Domestic Product is released on Wednesday and should help direct the future path of the European Central Bank. The Euro is already performing well and so any improvement in the growth numbers are likely to see additional gains for the Euro.