Looking at what is happening, I would like to say that the pound just follows a single European currency. This will not be true, since, for its further weakening, there were enough of its own, purely British, reasons. The beginning was put by data on borrowings of the public sector, which increased by 6.2 billion pounds, which in itself is not so happy. Well, the main reason was inflation, which fell from 2.5% to 2.4%, and if there was still hope that the Bank of England will raise the refinancing rate within a year, now one can forget about them. The second GDP estimate for the first quarter once again confirmed the fact of slowing economic growth. Well, what is even more frightening is that the rate of investment growth has slowed from 2.6% to 2.0%, which bury all hopes of accelerating economic growth. Only retail sales, whose growth rates accelerated from 1.3% to 1.4%, could at least slightly brighten the negative for the pound. Nevertheless, the US also had its negative, as sales of new homes declined by 1.5%, and in the secondary market by 2.5%. Also, the number of applications for unemployment benefits increased by 40,000. However, positive news was much more than in the UK, and the significance of one of this news is much more important. Thus, preliminary data on business activity indices showed growth in all areas. The production index rose from 56.5 to 56.6, and in the services sector from 54.6 to 55.7 so that the composite index rose from 54.9 to 55.7. Well, the main event of the week was the publication of the text of the minutes of the meeting of the Federal Commission for Open Market Operations, from which it follows that the Federal Reserve will most likely raise the refinancing rate at the next meeting.
The coming week can bring a little positive for the pound. Thursday will accompany the publication of a large block of data for the UK, and it is projected to accelerate the growth rate of housing prices from 2.6% to 2.9%. Given that the state of the real estate market is one of the main criteria for the investment attractiveness of the UK, the price increase will have a positive impact on the pound. Also, the volume of consumer lending could increase by 1.4 billion pounds against 0.3 billion pounds a month earlier. Moreover, the number of approved applications for mortgages may reach 63,190 against 62,914. So, there will be plenty of reasons for the pound's joy. However, the index of business activity in the manufacturing sector may decline from 53.9 to 53.6. Nevertheless, optimism in relation to the pound will be short and not so strong, as the US statistics are also expected to be quite good. In particular, the second GDP estimate for the first quarter should show even greater acceleration of economic growth rates than the first estimate showed. The main event of the week will be Friday's report of the US Department of Labor. It is expected that 185,000 new jobs were created outside agriculture, compared with 164,000 a month earlier. Also, the growth rate of the average hourly wage should accelerate from 2.6% to 2.7%. And all this with the invariance of other indicators.
Thus, the trend to strengthen the dollar remains, and only on Thursday, the pound will be able to strengthen its position somewhat. However, on Friday, everything will return to normal. In the best case scenario for the pound, the week will end at 1.3350. But the probability is high that the pound will drop to 1.3250.
