We saw GBPEUR exchange rates ease off into the weekend after a very strong start to the week- seeing a high of 1.1830 and closing at 1.1750. The positive news is that Sterling seems well supported in the 1.17 area- and as long as data can support the price it may give it enough to springboard into the next level. Though we saw positive GDP numbers for the UK, there are many more data releases that will determine the direction of Sterling next- so it seems investors are cautious going into this week.
This week the most noteworthy data releases for the UK are employment figures on Tuesday morning where we are hopefully going to see a rise in employment as more of the workforce come out of the furlough scheme going into September. The next data release of interest is inflation on Wednesday morning which is expected to come in at 2.2%- at this point, I do not think it is worth getting attached to CPI numbers as we should see them bounce around over the next few months- with oil prices volatile and issues with shipping, costs are rising it is no secret, but whether it is permanent or “transitory” remains to be seen. The faster and higher inflation rises, the faster Central Banks will have to look at raising interest rates, which changes the landscape entirely.
On Friday we have retail sales for the UK- the current expectation is that they come in lower than last month, which could be due to bad weather in the UK, a little bit of a lull after the Football tournament, and fears of rising cases and people having to isolate- for this reason, I do not think a slight drop in retail sales is too worrying, as cases fall, the public will become more confident and go out and spend- so the focus has to remain on cases.