Sterling tumbles as UK data disappoints last week

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The UK was the main focus last week with Wednesday's Budget viewed as Sterling negative despite George Osborne surprised many by cutting corporation tax by 2% and fuel tax by 1p per litre. The Office for Budget Responsibility also cut its 2011 growth forecast from 2.1% to 1.7%, due to a spiralling inflation rate, which soared to 4.4% in February, according to Tuesday's figures. Despite the ongoing threat of inflation, Wednesday's MPC minutes revealed an unchanged 6-3 vote against raising interest rates.

Events of last week saw investors totally lacking in sympathy for Sterling. As the Euro faded against the US Dollar, Sterling faded against both, touching its lowest level of the year against the Euro. Against the commodity currencies Sterling fared even worse (commodity prices have soared as investors expect demand for metals to increase as Japan rebuilds), falling seven and a half cents against the Australian Dollar and ten cents against the New Zealand Dollar.

Friday's economic data had little influence on the day's activities. IFO's survey of German business confidence delivered figures roughly in line with expectations. The revision to US fourth quarter gross domestic product growth was upwardly revised to an annualised 3.1%, lifting quarterly growth to 0.8%. Consumer confidence was revised down to 67.5 by the University of Michigan.

Thankfully for Sterling bulls, it is a quiet week for the UK, interrupted on Tuesday by mortgage approvals data and final GDP figures for the fourth quarter of 2010 where a further downgrade would provide a fresh setback to the UK economy and Sterling. It's an important week for US jobless data, with Wednesday's Challenger job-cut report followed up on Friday with the influential non-farm payrolls.