The Pound begins the week where it left off on Friday, trading at 1.171 against the Euro and 1.24 against the USD. A number of key economic releases this week could set the tone for Sterling, with economic data playing a far more important role now that the UK has given notice for Article 50.
First up on Tuesday will be core PPI and CPI figures which measures changes in consumer prices for the month of March. Core figures YOY are expected to show a small dip but MOM figures continue to accelerate beyond the Bank of England’s 2% target for inflation.
Mark Carney the Bank of England’s Governor has on many occasions expressed caution to rising consumer prices in the wake of the Brexit vote. This could dent consumer spending if wages stagnate, on Wednesday markets will get a glimpse of the UK’s employment sector and the latest wage growth figures.
If wage growth slows and inflation accelerates, the concern is that consumer spending will slow which could have significant implications for the UK economy.
GBP investors will be watching these two releases carefully and any deviation from expectations could stir further volatility for Sterling exchange rates.
Is the Brexit landscape changing?
Mark Boleat – the policy chief for the City of London Corporation has claimed that the financial sector’s outlook has improved since Article 50, stating that the city of London will keeps its status as the financial hub of Europe despite concerns of jobs relocating.
Mark Carney has also weighed into the debate, highlighting that most banks have contingency plans for Brexit.
Is this a sign of better things to come? Brexit negotiations will be the driver behind Sterling exchange rates in the weeks to come, but for now markets will look to the economic data tomorrow to see determine how the economy is holding up post Article 50.