The General Election is up and running, how will sterling react?
Carl Hasty, director of Smart Currency Business, said:
“The last couple of weeks have been difficult for sterling losing ground against the board and this could continue as the General Election officially starts today as Parliament is dissolved. The weekend papers highlighted Labours lead in the opinion polls which would be good for our continued membership of the European Union. I am sure, as we saw with the Scottish vote on Independence, there are likely to be many twists and turns in the next few weeks, probably matched by sharp movements in sterling.
“This week we have some “lighter” data at the start of the week but in the two days before Easter we have the release of the March Purchasing Managers Indices for Manufacturing and Construction and both are expected to show a small improvement. The key data for the Service sector will be released after Easter.”
Yet another deadline for Greece
Commenting on performance figures from Greece, Carl said:
“The Euro has been enjoying a renaissance over the last couple of weeks strengthening against the US dollar and sterling.
“Today we have yet another meeting between the Greeks and their key lenders. Hopefully the list of reforms is close to being agreed as Greece is fast running out of money and desperately needs the next tranche of bailout funds.
“Key data releases this week centre around inflation and employment. After February’s surprise reduction in deflation to -0.3%, expectations are for another improvement in March to -0.1%. Unemployment for the Eurozone is expected to hold at 11.2%.”
Will poor US data undermine the US dollar?
Commenting on poor data from the US Carl said:
“The key question that everyone wants an answer to is when will the US start raising interest rates? Trouble is there seems no clear timetable as US economic data is wavering.
“This week we have key employment data due out on Thursday and Friday and important manufacturing data out on Wednesday. Expectations are for these to have fallen, not disastrously but enough to make forecasting the timing of an increase even more difficult.”
China – how is it doing?
Observing China’s data, Carl commented:
“China for many years has been at the forefront and a key driver of growth. Recent times have seen it falter and this week we have key March Purchasing Managers Index for Manufacturing. Last month markets were surprised as it fell below 50, the figure above which indicates expansion and below contraction in that business sector. The figure is expected to be below 50 but slightly improved against February’s reading.”
