Sterling ended last week underneath a wave of negative sentiment as markets reacted with unease to events in the Middle East.
As typically happens at times of global stress, investors flocked to the US dollar, which ended Friday 0.4% up against the pound and around a quarter of a per cent up against the euro over the week. GBP/EUR meanwhile fell by 0.5% as UK data arrived.
The data in question was UK retail sales. Sales volumes were unchanged in March, having been forecast to increased by 0.2% and following 0.1% growth in February.
Israel’s latest round of military strikes against Iran overshadowed the usual hustle and bustle of currency markets. The mood was tense and markets saw a notable shift from riskier assets like stocks and fringe currencies towards the US dollar and fixed income bonds.
Unfortunately, the mood is much the same heading into this week. The pound in particular can only sit and watch as discussions continue to be dominated by the threat of regional war in the Middle East. GBP/EUR fell further in weekend trading to open the week at its lowest level in a month.
Here’s what to look out for this week…
European budget statistics arrive today but the week kicks off in earnest on Tuesday with HCOB manufacturing and services data from the eurozone.
Wednesday sees the German Ifo Business Climate survey and US durable goods figures, while US GDP figures on Thursday could lead to an increase in market volatility.
Friday is headlined by US personal spending and income. Despite the flow of macro data, it could well be that geopolitics is the main driver of moves this week.
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