Sterling exchange rates (predominantly against the Euro) will enter the next week a lot stronger, after pretty good momentum for Pound to Euro exchange rates over the last few days- despite a pretty risk-off market on stocks and commodities through the latter half of the week.
This next week will be pretty data-reliant for any Sterling movement, on Tuesday we have job numbers for the UK which will be watched heavily by everyone to see what effects furlough ending is having on the market- this for me is probably the most important release of this week and will give us a good idea of where the job market is at the moment.
Wednesdays UK inflation data could be just as important as the forecast is a rise to 2.9% (Which was the BoE target)- it is no secret prices are going up everywhere for everything at the moment, and if the jobs market is not stable, rising inflation is a real concern for any economy, we can see what is happening in the U.S right now, and the UK has to be vigilant about the numbers here as well. Rising inflation means interest rates have to go up next year, if the CPI comes in slightly lower then it could support rates staying low for a little while longer.
The next concern as we head into Autumn is how the UK Government is going to tackle the pandemic- there have been rumors over the last week about potential restrictions in October, and with the recent rise in National Insurance contributions, it seems the public are very uncertain about what the Government will do next. Over the weekend it seems the plans for a vaccine passport in the UK have been ditched, and the UK Government could potentially relinquish its emergency powers (which expire at the end of the month)- this would provide a lot of certainty to businesses and individuals knowing another lockdown is not coming.
Another concern in the market right now is the blatant supply issues- though this is happening globally, it is becoming a lot more obvious that the UK is also suffering a Brexit effect with regards to imports, the UK is no longer in Germany’s top 10 export markets and the lack of products on supermarket shelves is only getting worse. We are also seeing energy prices on the rise, with many experts advising locking in energy rates for the next few years if possible as we are seeing direct inflation on this.