Sterling has been the star performer this week, driven higher by lower than expected jobless claims, an uptick in inflation, better than forecast retail sales this morning and Bank of England minutes that showed the MPC voted 9-0 in favour of keeping QE on hold for now. Aside from the positive data which naturally push the Pound up, the inflation figure and the Bank of England minutes are important because the forecast was for prices to fall gradually back towards the Banks target. The figure was not altogether unexpected, given the recent surge in oil prices but given the MPC have been adamant that inflation would continue to fall, rising prices may mean the bank begins to think about symbolic rate rises in the coming months and it is this that is reinforcing the move higher is the Pound over the last few days.

Next Wednesday the crucial Q1 GDP figure is released. This will decide the short-term path of the Pound, the expectation is for a mildly positive number because of the recent uptick in overall economic data. However worries remain over the construction sector which may have contracted enough in the first few months of the year to drag the overall GDP number into negative territory and confirm that the UK has re-entered a technical recession.

Away from the UK next week we have the Fed interest rate meeting, US GDP, durable goods orders and the Fed Chairman talking so it’s a busy week for America. QE seems to be back on the table now the surge in employment in Q1 has slowed down. The market as ever will be waiting for a further softening in tone; it looks like risk assets will do well, and the US to sell off once more.