Sterling begins to strengthen... But for how long?

On Friday we finally saw the Pound bounce from the lows we had seen over the last 4 weeks, which was welcomed by many clients who are currently selling the Pound. The reason for the boost was the Eurozone's reaction to Article 50, though there were some hostile comments made by some Heads of State, the public statement left room for trade negotiations to begin before the UK has left the EU, which is fantastic news for investors.

Though Brexit will still be in the spotlight, especially as negotiations will be ongoing, I do not expect to see any effects until April 29th when the EU will hold their first "Brexit Summit", until then I think the UK can go back to relying on economic figures for market movement. 

Speaking of economic figures, there is a number of releases this week that I deem noteworthy, and will most likely have an impact on the exchange rates, the first is UK PMI (Manufacturing) which will be released 09:30 on Monday morning, as these figures are expected strong I would expect the Pound to continue its trend through Monday, there is also weak U.S manufacturing figures out at 4pm which should drive the GBPUSD rate further. 

On Tuesday morning, the Eurozone will release retail sales figures which are expected to show a contraction down to 1.1% YoY, and later on in the afternoon President Draghi will be speaking in Frankfurt, it will be interesting to see what the ECB's stance is on the upcoming negotiations between the UK & the EU and what economic implications it may have on the Eurozone.

Friday may be the most interesting day of the week, as we have a number of releases across the globe, with Industrial production figures and trade balance out of Germany, alongside Industrial and Manufacturing production figures, trade balance and GDP estimates from the UK. The UK figures are expected stronger which should be good for the Pound if it does come out this way, but I think the markets will be waiting for BoE Governor Mark Carney's speech in London at 11am. All eyes are on the UK now to put up interest rates and the markets will be keen to hear any monetary policy talk on Friday.

All in all, it seems that if economic data comes out the right way, then the Pound could be in for a positive week without any political intervention, it is also important to note that the French elections are coming up and will probably take centre stage as they progress.