Last week the Pound seemed to be having a pretty positive week following the BoE interest rate decision where Mark Carney commented that an interest rate hike “sooner rather than later” will be on the cards- we saw the Pound gain around 1.5% across the board which gave some excellent buying opportunities. Inflation and wage data will now be key to watch through the year as it will give us an insight into when the BoE will be planning a hike, many are banking on May, and many analysts are looking at September as a realistic target. Either could be correct, but it is the real data that will guide us as to when is likely for this decision to happen.

Unfortunately, this Sterling strength was very short-lived, following comments made by Michel Barnier suggesting that there are disagreements between the EU & the UK in reference to the transition, which could lead to no transition period at all. As I have said time and time again, the UK economy could be doing amazingly, but Brexit will be the grey cloud over the Pound until everything is said and done, I say that to say if you find an exchange rate that works for your situation, don’t gamble on the market, as Brexit headlines could reverse your recent gains very quickly!

Moving forward, Theresa May will be making a speech over the next 3 weeks, detailing the UK’s position in regards to Brexit, and this will undoubtedly be a volatile event, as it is never clear what the Prime Ministers position on Brexit actually is! To my understanding, Boris Johnson will also be speaking this week, whether this will have an effect on the markets or not is yet to be seen, but anything Brexit related is a high priority when it comes to market volatility!

Moving on to economic data, the main release Sterling buyers and sellers will be watching will be UK inflation figures on Tuesday. The expectation is that this data will come in slightly weaker than previous, and this is expected to be positive for the Pound. Inflation was very high in the UK, and interest rates were raised to control this if inflation comes in lower, this means that the interest rate hike worked, and will put confidence into the BoE and the UK economy as a whole.

Friday will also be an important day as UK retail sales will be released- the expectation is that these figures will come in stronger at 2.4% YoY, if this is the case, the Pound could strengthen following this release.

If you have an upcoming transaction to make and would like further analysis on your particular currency pair, then please don’t hesitate to contact me.