Weak GBP Performance at the End of Last Week Could Extend into this One
The Pound closed trading last week making losses, with lower consumer confidence and mixed GDP data reducing demand for the UK currency.
The coming week’s economic outlook doesn’t look too positive for Pound traders either, but GBP exchange rates could still improve if UK data comes in better than expected.
The headline UK ecostats are a trio of purchasing managers indexes (PMIs), covering manufacturing on Monday, construction on Tuesday and services on Wednesday.
These figures are all predicted to fall for their September readings, which would mean a slower pace of sector activity.
Even if the manufacturing and construction sector figures rise, it is possible that a services PMI decline will still weaken the Pound due to the sector’s significant contributions to UK economic activity.
Beyond these planned economic announcements, Pound Sterling exchange rates could also be affected by any updates on the Brexit process.
For context, the Pound initially rose last Monday when Brexit Secretary Dominic Raab stated that he supported continued negotiations with the EU to secure a good Brexit deal.
If a similar pledge for progress, or even an official UK-EU update on Brexit comes over the week, then the Pound could rise against its peers.
What Other Events Should You Watch Out For?
As well as the coming week’s UK PMI data, the Pound’s performance against other major currencies could be affected by major data releases from other parts of the world.
In the Pound to Euro exchange rate, the pairing could be influenced by Monday’s Eurozone unemployment rate data, as well as Wednesday’s PMI and retail sales stats.
The unemployment rate reading isn’t expected to change, but a forecast-matching rise in September’s services PMI and August’s sales data could push the Euro up against the Pound.
The Pound to US Dollar exchange rate could be similarly affected by US PMI stats out on Monday and Wednesday.
Manufacturing and non-manufacturing activity PMIs are expected to decline, which could enable the Pound to trade higher against the US Dollar.
Despite this potential support for a GBP/USD rate rise, however, the Pound could drop back if Friday’s US unemployment rate reading drops from 3.9% to 3.8% as expected.