Today is the start of the first full weeks trading of 2015 and it has not started well for the GBP/USD cross. Trading opened this morning with GBP/USD sitting just above $1.53 but over the course of today we witnessed a surge in the dollars value which has left Cable sitting close to an 18 month low of $1.5208.
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On Friday UK manufacturing fell to its lowest levels for 3 months and with this mornings figures showing the UK's construction sector also contracted in December, the pound has found itself immediately on the back foot, unable to shake of the advances of the improving dollar.
Why has the dollar been gaining so much ground against the pound?
Its mainly down to interest rates. The U.S. economy has been performing well in recent months and with the UK struggling with poor inflation numbers and weak wage growth it looks as though the FED will start raising interest rates before the Bank of England.
The U.S. dollar is also seen as a safe-haven, with so much uncertainty in the Ukraine and Middle-East, coupled with the issues surrounding Russia and the price of oil we are witnessing a flight to safety which in turn is strengthening the greenback.
This week's data releases which could impact GBP/USD
Tuesday - A quiet day for the UK with only data of note coming in the form of Services PMI. The afternoon could see some volatility for GBP/USD with the U.S releasing it latest Factory orders and Manufacturing numbers.
Wednesday - Nothing to write home about from the UK today but in the States the Fed will release the minutes from their last meeting, there is also Trade Balance figures and Mortgage approvals.
Thursday - Potentially a big day for the UK and the Bank of England announce their latest interest rate decision, a hike is unlikely but any comments from Governor Carney could have an impact on the pounds value. In the afternoon we will see the latest jobless numbers from the States.
Friday - Probably the biggest day of the week in terms of data releases. From the UK we will get the latest Trade Balance and Industrial and Manufacturing Production figures. The U.S will provide us with their latest Non-Farm Payroll figures, there is also Unemployment numbers and a GDP estimate.
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