It’s been a dramatic week in British politics. While Theresa May might have given the official date she plans to stand aside, the Conservative Party leadership race is now on. The Pound has dropped near multi-year lows on the Brexit and leadership uncertainty, and markets are waiting to see whether a pro-Brexit candidate will land the job. If it appears a no-deal Brexit is on the table, the Pound could have further to fall.
In the week ahead, a number of different economic data points could impact the Pound, Euro, and US Dollar exchange rates.
Pound Sterling Exchange Rate Forecast
UK economic data will begin trickling into markets on Tuesday, with the Nationwide House Price Index and BBA Loans for House Purchase data. Thursday will continue with the GfK Consumer Confidence stat, followed by Net Consumer Credit, Mortgage Approvals, and Net Lending Secured on Dwellings numbers.
Unsurprisingly, any developments in UK politics could also influence the Pound, and will likely be Sterling’s main driver moving forward.
Euro Exchange Rate Forecast
Germany will be under the microscope this week, starting on Monday when the latest German Retail Sales figures are due out. The German GfK Consumer Confidence stat will follow on Tuesday ahead of Wednesday’s highly influential German labour market data. On Friday, the German inflation figure will make its way onto the market, alongside the final first quarter Italian growth number.
This week, European Central Bank (ECB) meeting minutes flagged policymakers’ concern over the ongoing economic recovery of the currency bloc. Any dismal economic figures or further comments from the central bank could serve to put more pressure on the Euro exchange rate. German numbers will be in particular focus as the currency bloc’s largest economy.
US Dollar Exchange Rate Forecast
There are a few highly influential data releases due out in the week ahead, such as the US Consumer Confidence number on Tuesday. Confidence is expected to dip in May, from 129.2 to 128.0. Meanwhile, Thursday will bring with it the Q1 Gross Domestic Product (GDP) number, and the Advance Goods Trade Balance. Closing up the week on Friday will be the Personal Consumption Expenditure stat.
The US Dollar might also be affected by politics in the weeks to come. The ongoing trade spat with China might continue for some time, and economic growth could suffer as a result. This has ramped up speculation that the Federal Reserve may need to make an interest rate cut this year, which has boded badly for the US Dollar exchange rate.