No good news for Pound

This week's lack of data releases has done nothing to help sterling, as speculation that the Eurozone interest rate could go up next week continues. In the absence of UK interest rate rises, the Eurozone base rate could leap further away, causing Euro strength and worse exchange rates for sending money to Europe from the UK.

If you have a requirement to send or receive foreign currency in the coming weeks, contact Currency Index who will be happy to keep you informed of the latest news and rates.

Currency calendar this week

This week we return to a little less important data as the month nears its end; although tomorrow's Q4 GDP revision in the UK is likely to be important. The Pound seems to have very little support at the moment, and fell significantly against most currencies last week.

Monday 28th
1230 - US consumption (Feb)
1600 - Speech: ECB President Trichet
2145 - New Zealand trade balance (Feb)

Tuesday 29th
0930 - UK mortgage approvals (Feb), net lending, business investment & GDP revision (Q4 2010)
1400 - US consumer confidence (Mar)

Wednesday 30th
1000 - Eurozone economic, industrial & consumer confidence (Mar)

Thursday 31st
0700 - German retail sales (Feb) & UK Nationwide house price index
0855 - German unemployment rate (Mar)
1330 - Canadian GDP (Jan)

Friday 1st
1000 - Eurozone unemployment rate (Feb)
1330 - US unemployment rate, average earnings & non-farm payrolls (Mar)

Retail sales down

This morning's retail sales figures have troubled the Pound further after a drop yesterday - February's figures were down 0.8%, and only showed a 1.3% increase over the last 12 months compared to expectations of 2.4%.

Sterling seems to have very little support at the moment, and there is no more major UK data expected this week.

No change from Bank of England

The minutes of this month's Bank of England meeting on interest rates showed the same results as February's vote: 3 of the 9 committee members voted for an interest rate rise in the UK, with the remaining 6 voting for no change.

With inflation running high we may still see a rate rise in the coming months, but while growth is still fragile it looks like the Bank remains cautious. The Pound fell when the news was announced, as markets look to higher interest rates to boost the value of the currency.

Next, we have the Budget announcement at 12.30 today.

UK inflation up to 4.4%

This morning's UK inflation figures have come out higher than expected, with the headline CPI rate now at 4.4%, up from 4% in January.

Retail prices, which include mortgage payments, are up 5.5% - the highest rate for 20 years.

Although this is not great news for consumers, it does mean that the Bank of England might be more likely to raise interest rates in the next few months, so the Pound tends to gain value in anticipation of interest rate rises. We have seen some small gains this morning against most major currencies, although with the Budget and Bank of England Minutes due out tomorrow, any gains may well be short lived.

Currency news this week

This week we have some crucial economic events in the UK - notably on Wednesday when the Chancellor releases ths budget at 1230, as well as the Bank of England minutes earlier in the morning. The UK's economic prospects and future interest rate policy will both be in the limelight, with immediate effects likely to weigh on the value of sterling.

Do keep in touch with your account manager at Currency Index to ensure you are not exposed to exchange rates moving against you during the week.

Monday 21st
Overnight - Rightmove house price index (March)
1400 - Speech: ECB President Trichet
1400 - US home sales (Feb)

Tuesday 22nd
0700 - Swiss trade balance (Feb)
0930 - UK inflation & public borrowing (Feb)
1230 - Canadian retail sales (Jan)

Wednesday 23rd
0930 - Bank of England minutes (Feb)
1230 - UK budget report
1400 - US new home sales (Feb)
2145 - New Zealand GDP (Q4 2010)

Thursday 24th
0930 - UK retail sales (Feb)
1230 - US durable goods sales (Feb) & jobless claims (Mar)

Friday 25th
EU economic summit
0900 - German business climate survey

Jobless total rises

This morning's labour market statistics showed a rise of 27,000 in unemployment to 2.53million at the end of January - the highest total since 1996.

The number of people claiming jobseekers allowance, however, fell to 1.45million.

The jobless rate of 8% is also the highest since 1996.

The Pound has been largeley unaffected, although better figures would have been likely to improve the outlook for the UK and therefore the Pound.

The only other important news due in the UK this week is public sector borrowing, announced on Friday.

This week's currency calendar

This week is relatively quiet for scheduled economic announcements, but the following all have the potential to move exchange rates. Contact Currency Index for the latest news and quotes.

Tuesday 15th:
1000 - German & Eurozone ZEW sentiment survey
1815 - US Federal Reserve interest rate decision

Wednesday 16th:
0930 - UK unemployment & average earnings (Jan)
1000 - Eurozone CPI inflation (Feb)
1230 - US PPI inflation (Feb)

Thursday 17th:
0830 - Swiss interest rate decision
1000 - Eurozone construction output (Jan)
1230 - US CPI inflation (Feb)

Friday 18th:
0930 - UK public borrowing (Feb) & mortgage approvals
1100 - Canadian CPI inflation (Feb)

Trade balance narrows sharply in January

Figures out this morning showed the UK trade gap is at its narrowest level for nearly a year, down to £7bn in January from £9.7bn in December.

Although good news for the UK economy, the figures are relatively volatile, so it is too early to say whether we are seeing a longer-term rebalancing of trade.

Tomorrow is a crucial day for sterling, with GDP estimate, industrial & manufacturing production, and the Bank of England's interest rate decision all released throughout the day.

Housing market stabilises, but retail sales fall

Today's 2 pieces of UK economic news were mixed - with RICS reporting some better stability in the housing market, but the British Retail Consortium showing the second weakest sales figures since May 2009.

The Pound remains vulnerable to any further negative news, with tomorrow's trade balance figures due at 9.30am.

Currency news this week

A busy week ahead, with the following data all with the potential to affect exchange rates:

Monday 7th
0930 - Eurozone investor confidence
1200 - Speech: ECB President Trichet

Tuesday 8th
Overnight - UK RICS house price balance
0030 - Australian business confidence
0645 - Swiss unemployment rate
1315 - Canadian housing starts
2330 - Australian consumer confidence

Wednesday 9th
0815 - Swiss CPI inflation
0930 - UK trade balance
1100 - German industrial production
2000 - New Zealand interest rate decision

Thursday 10th
0030 - Australian unemployment rate
0700 - German trade balance
0900 - European Central Bank monthly report
0930 - UK industrial & manufacturing production
1200 - UK interest rate decision
1330 - US trade balance
1900 - US monthly budget statement

Friday 11th
0700 - German CPI inflation
0930 - UK PPI inflation
1200 - Canadian unemployment rate
1330 - US retail sales

US labour market improves

The US Dollar has been gaining value this afternoon, after data showed unemployment down to 8.9% and 192,000 new jobs being created in February.

Rates for sending US Dollars are still excellent, but with this data and the uncertainty around the UK recovery, we may have seen rates peaking for the time being.

Eurozone interest rates "could rise next month"

Jean-Claude Trichet, the President of the European Central Bank, gave a clear indication today that Eurozone interest rates could go up as early as April, as the ECB kept rates at 1.0% at its March meeting.

Although fears over the costs of servicing debt in the likes of Portugal and Ireland may cause the Euro to weaken, overall if the Eurozone raise interest rates before the UK, analysts are convinced that the net effect will be positive for the Euro - and therefore negative for sterling.

If you are sending money to Europe in the foreseeable future, March might therefore provide some of the best opportunities to secure a rate for some time.

Positive data keeps sterling strong

Yesterday's data was generally good for sterling, giving exchange rates a little room to improve during trading through the day.

Tomorrow we have the Eurozone interest rate decision, so do think about securing rates today - after so much positive data in one day yesterday, is it likely that rates will improve further?

Yesterday's summary for the Pound:
- Nationwide survey showed house prices UP 0.3% in February
- Lending to individuals UP to £1.5bn in January
- Mortgage approvals UP above 45,000 in January
- Manufacturing PMI on target
- Money supply UP