Over the past five days the Pound Sterling to Singapore Dollar (GBP/SGD) exchange rate fluctuated between a high of 2.0132 and a low of 1.99175.
The Pound started last week strongly as the UK’s Markit Services PMI printed above expected levels and demonstrated notable confidence in the sector’s future performance.
However, as the days progressed, UK election concerns and less-than-impressive UK trade, industrial production and construction output reports saw Sterling pare some of its earlier gains.
At the beginning of this week a concerning narrowing in China’s trade surplus (due to an unexpected drop in exports) triggered widespread market movement and reduced demand for Asian assets.
The Pound Sterling to Singapore Dollar rallied during the European session in spite of a lack of any influential economic reports for the UK.
We could see GBP/SGD exchange rate movement tomorrow as Singapore publishes growth data for the first quarter.
Economists have forecast that the region’s economy expanded by 0.7% on the quarter in the first three months of this year, a much smaller rate of expansion than the 4.9% growth recorded in the final three months of last year.
This would result in annual growth of 1.9%, down on the year-on-year expansion of 2.1% achieved in quarter four of 2014.
Should the GDP data fall below this level, the Singapore Dollar could soften.
The direction taken by the GBP/SGD exchange rate will also be dictated by the UK’s Consumer Price Index.
As the Bank of England (BoE) has cited rising inflation as an essential precursor to higher interest rates, an uptick in CPI would bolster the Pound against its peers.
However, if inflation holds at 0.0%, or enters deflation territory, we could see Sterling weaken across the board.
Other reports with the potential to initiate Singapore Dollar volatility this week include the nation’s retail sales numbers for February (due out on Wednesday) and Friday’s trade balance stats.
If estimates for month-on-month sales growth of 0.16% and year-on-year sales growth of 3.71% are met with or exceeded, the Singapore Dollar could rally before the close of the week.
Singapore’s trade balance stats are expected to show a widening in the nation’s surplus.