British Pound Exchange Rates: What we are Watching in the Week Ahead

Volatility in global FX markets is elevated and the coming week offers more turbulence for those with an interest in pound sterling.

While the UK data and event calendar is thinner this week there are still some important numbers to watch out for. The data could go some way in answering questions as to whether or not the Bank of England can continue ignoring the underlying strength of the UK economy.

With the US Fed likely to raise interest rates in December markets could buy the pound in anticipation of UK descision-makers bringing forward their first rate rise. Strong data will be needed to shift opinion and in turn push GBP higher.

Disappointments could well see sterling punished.

1. September Labour Report (11 Nov):

"We see balanced risks around the unemployment rate, and it should hold stable in September with both TD and consensus expecting a reading of 5.4%," analysts with TD Securities tell us.

The unemployment rate has been on a steady decline in recent months, and we anticipate some pause before further declines towards the end of the year.

Annual private-sector regular pay growth also likely pulled back a little in September, and TD Securities expect a the reading to dip down to around 3%.

2. September Construction (13 Nov):

Economists expect a strong showing from UK construction in September, rising 1.5% m/m (consensus: 1.2%). The PMI Construction rose to a very high level in September, and house price growth has remained strong in recent months, supporting activity.

3. October BRC Same-Store Sales (10 Nov):

"It’s a very quiet week for UK data, so with not much to take guidance on, we’ll have a quick look at the BRC same-store sales for October to gauge the health of consumer spending," say TD Securities.

Given general weakness in inflation, the number is likely to remain relatively subdued, falling from its 2.6% y/y reading in September to something just below 2%.