Hieronder volgt de Weekly Outlook in het Engels van Bart Hordijk, valuta-analist bij Monex Europe, met commentaar op de ontwikkelingen op de valutamarkten:
Last week: Sturdy sterling, intervention in Syria, Eurozone slowdown and subsiding trade tensions
GBP The lack of top-tier economic data did not prevent sterling from rallying last week, as the pound broke out of its trading range against euro. It seems the Brexit transition period, agreed earlier this year with the European Union, eased fears over a hard Brexit, contributing to a sterling-positive environment.
EUR had another week of soft second-tier data, but nevertheless held quite steady against USD, while hitting a ten month low against GBP.
USD had a mixed week. Despite trade tensions easing with China and Trump suggesting the door is open to conversations about re-joining the Trans-Pacific Partnership, intervention with Syria and tensions between the White House and Kremlin weighed on the dollar in the back end of the week.
This week: Decisive week sterling and Treasury FX report
This week is chockfull of top-tier data for the UK, with the Consumer Price Index, Average Earnings and the yardstick of consumer spending appetite; Retail Sales being released throughout the week. Members of the Monetary Policy Committee will be watching intently as this week’s data will be crucial for judging if they can follow through on hints of a rate hike in May.
Industrial output has been soft so far in this quarter in the UK, while Retail Sales might slump as well, given that this month’s release covers the period in which the “beast from the east” snowstorm visited the UK. Risk for Q1 Gross domestic Product is therefore tilted to the downside and since inflation may soften faster than previously expected as well, the May rate hike may come under doubt. These data releases will likely determine whether sterling will slump back into its old trading range, or finally leave it behind and move back toward 1.20 levels on GBPEUR seen before (chart 1).
Developments between Russia and the US will likely influence the risk appetite in markets, something which can either strengthen or hurt risk sensitive currencies. On Monday the US is said to announce new sanctions against Russia, while also Russia may respond to the US missile strikes in Syria with economic repercussions.
Chart 1: GBPEUR may leave its recent trading range and head for 1.20 after this week’s data – or fall back to its 1.11-1.15 range.