With no real data of note coming out of the UK today sterling was at the mercy of events elsewhere and lost ground from Fridays high. Wednesday and Thursday are the big days for the UK this week in term of data with the Bank of England (BoE) minutes and unemployment figures due on Wednesday morning and retail sales figures on Thursday.
So how will the data effect exchange rates?
I don't expect the BoE minutes to have much of an impact of as there was no real surprises when MPC members met at the start of the month. The bank decided to leave interest rates on hold and decided against further stimulus for the UK economy. Unless there is a change in the number of policymakers voting for quantitative easing it shouldn't cause too much movement in the currency market.
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The big move of the day may come from the unemployment figures which are forecast to improve. If the number of people out of work and the number of people claiming Job-Seekers Allowance fall it could add strength to the pound and push rates back towards $1.54.
However, if there are any gains on Wednesday I would expect them to be short lived as Thursday's retail figures are tipped to be poor. It is widely predicted that the cold weather in March has had a huge impact on shops and small businesses and that the retail sector contracted last month.
If the figures do show a contraction not only will it wipe out any gains from the previous day it would also add to fears that the UK is heading back into recession when the official figures are released on the 25th April. If the UK was to enter the dreaded triple-dip then we would see sterling fall against a basket of currencies and the news could push cable back under $1.50.
I will keep you updated with how exchange rates reacted to the data but in the mean time if you have a requirement to buy or sell dollars in the coming weeks then feel free to get in touch. With so much uncertainty surrounding the FX markets at the moment getting the timing right on your transfer could save you thousands. By using the link below and completing the contact form, I will be able to talk you through the different options that are available that can protect you against any adverse market movement.
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