KSA- Will sterling be boosted by flow of data

(MENAFN- Arab News) A forgettable end to last week for sterling saw it lose ground against the euro for the third successive day while falling close to pre-election levels against the US dollar. There was a dearth of UK economic data releases to boost sterling. This week is likely to be very different as we have a constant flow of UK economic data releases and the all-important interest rate decision from the Bank of England (BoE).
The May purchasing managers' indices (PMI) from the manufacturing construction and services industries are released this week. These have all continued to show strong positive growth with the services sector making up 70 percent of the UK economy investors will be particularly interested in this figure on Wednesday.
The outcome of the general election is also expected to have had a positive effect. Aside from this the BoE vote on interest rates will be the dominating releases. With two members of the monetary policy committee recently demonstrating a desire to increase rates we may see increased movements in the run-up to this vote on Thursday.

Euro zone data how will the euro react?
The euro ended last week strongly on the announcement from the Greek economy minister that Greece expects to repay the first part of their International Monetary Fund (IMF) loans due on June 5th. This week sees a flow of key data releases from the euro zone plus the European Central Bank (ECB) interest rate decision on Wednesday.
Today we kick off with the May euro zone purchasing managers index for manufacturing which is expected to show continued growth benefitting from the gradual economic recovery a weakened euro and the ECB's program of quantitative easing beginning to help. We also have inflation data from Germany which is expected to be in positive territory.
The interest rate decision by the ECB is very much expected to be one of no change but the markets will be very interested to see what its president says in the post meeting press conference about the state of the euro zone and perhaps more importantly the state of the discussions with Greece on their debt restructuring.

US dollar
Further strength from the US dollar was seen on Friday with slightly better-than-expected preliminary growth results. The figure was still in the negative attributed to a harsh winter along with low oil and energy prices. This mirrored data in the first quarter of 2014 which also showed a negative figure. This release echoed previous US Federal Reserve members' expectations of a slow first quarter.
As this will be the first full week of a new month we can expect May manufacturing and non-manufacturing purchase managers indices with both expected to show moderate growth.
The spotlight this week will be on Friday's non-farm employment change which is expected to show a slight increase on the month previous. In the lead up to these result we can expect both the ADP non-farm employment change and the weekly unemployment claims which will be regarded as possible indicators for the main release on Friday.
Talk of an Interest rate rise could pick up again if we see yet another positive week for the US dollar as some members of the US Federal Reserve still expect June to be a good time to start increasing US interest rates.

Good data from Denmark
The Danish krone strengthened over 0.55 percent against sterling on Friday due to good market data being released from the area. The growth rate over the last quarter came out at 0.4 percent. Perhaps even more importantly the growth rate over the last year came out at 1.7 percent 0.8 percent above target.
This demonstrates that the output of the Danish economy was greater than markets were predicting which caused an appreciation in its currency. It is well worth looking out for these results next month to see if this rapid increase is sustainable or simply the product of low oil prices.

Charles Purdy is director of Smart Currency Exchange.