Having broken through its year-long resistance level against the euro on Wednesday, the question is whether sterling can hold onto that gain or will slip back. This is a relatively quiet week for data too, so with the next Bank of England interest rate decision not until the very end of the month, rumour and speculation may be in the driving seat for sterling.

However, there are some clear clues now emerging that could determine its direction. We can now be as certain as you like about Andy Burnham becoming prime minister, with speculation becoming feverish as to what he will actually do in office. Tax rises look likely, but it will be his choice of chancellor that will be the biggest clue and potentially poses the biggest risk for sterling exchange rates. The date for that news is likely to be 20 July.

The other important factor in the direction of the economy, and exchange rates, is interest rates. In a busy week for central bankers meeting in Portugal, opinion seemed to be diverging. For the EU and USA, economic data including falling inflation for the former and a worsening jobs market in the latter suggested a disappearing chance of interest rate rises.

For the UK, both the governor and chief economist of the Bank of England appeared to indicate an increasing chance of interest rate hikes.

So, onto this week, where we have a few PMI (Purchasing Managers Index) reports, but the Burnham and continuing Middle East ceasefire look likely to be the more influential factors.