Busy week for sterling as Mervyn King says goodbye | Smart Daily Currency Note
GBP/USD – 1.5247
Sterling held firm against the euro before the weekend; however, tumbled against the US dollar by over a cent following positive data released in the US. On Friday the Bank of England described that net lending to individuals had increased in April further than expected; rising to £1.4billion from £1.1billion the previous month, though expectations the central bank could still loosen monetary policy could dilute sterling gains over the coming months. The Bank of England meet this week in what will be the last such meeting for Governor Sir Mervyn King before Mark Carney takes over in July, as a result, it would be a surprise if there is any change to the base interest rate level or the current asset purchase facility. Other key releases this week will be the Purchasing Managers’ Index (PMI) figures for the Services, Manufacturing and Construction sectors. Call in now for the latest updates and to see how sterling is performing.
The US dollar performed well on Friday as positive consumer sentiment and purchasing data emanating from the US meant expectations in the markets swung back towards the Federal Reserve reducing quantitative easing sooner rather than later. The University of Michigan’s consumer sentiment index rose above expectations in May, whilst the Chicago purchasing manager’s index also surprised by increasing well above predictions. This was all in spite of United States personal spending figures falling by 0.2% in April and indicates the recovery across the Atlantic can weather negative economic data going forward. Consumer spending surprised economists by shrinking along with Household Purchases as incomes in the world’s largest economy decrease, though house price rises along with cheaper fuel costs and a buoyant equity market are underpinning public confidence: crucial in seeing the recovery through going forward. Data released out of the US this week includes manufacturing and non-manufacturing PMI figures, trade balance data and a raft of unemployment data which includes the highly influential non – farm payroll data which will be announced on Friday and is always watched extremely closely by investors. Get the latest news by calling in.