Last week saw sustained positive moves for the
pound/dollar cross, after the run of poor data we have seen in previous weeks
there was finally some good news for the UK economy. In this week’s report
we will take a closer look at the events in the UK and U.S that had the greatest
impact on sterling and the greenback and how it affected the currency pairing.
It was a solid start to the week as Sterling pushed through
the $1.57 barrier for the first time in two weeks, and it was largely thanks to
the Euro. Gains made by the troubled single currency prompted investors to
leave the safe haven US Dollar and look at riskier alternatives, causing the
dollar to weaken and meant rates hit their highest level since the end of July.
Tuesday saw sterling continue to rise after data
released showed annual British inflation had unexpectedly increased for the
month of July. Rates rallied to a high of $1.5730 on the back of the news but
could not sustain the move as retail sales data from the US caused rates
to fall. Figures released showed that sales had increased for the first time in
four months, dampening the chance of the FED initiating another round of
quantitative easing, which meant cable finished the day back at $1.5680.
Last week also saw the release the Bank of
England minutes from their meeting at the start of the month; the minutes can
often cause some volatility in the market so all eyes were on Mervyn King and
other BoE policy makers. But sterling held its ground as the minutes showed a
unanimous vote against further monetary stimulus and an interest rate cut.
It wasn’t only the U.S that benefited from
positive Retail Sales data last week, Thursday saw figures released for the UK sector and
the results were much better than had been predicted. A rise of 0.3% compared
to the 0.1% originally forecast and coupled with poor U.S jobless claims and
housing data, Sterling
hit a fresh high of $1.5739.
Over the past seven days Sterling has gained almost 1% against the
dollar and last week’s movements once again show just how unpredictable the
currency markets can be.
It is impossible to predict which way rates will
move but completing the contact form means you will have all
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