What’s been happening?

Pound Sterling – UK Markets 

According to the Chartered Institute of Personnel Development (CIPD), UK employers on average planned to raise basic pay for staff by 2.1% at their next annual pay settlement, compared with 1.8% three months ago. Such a positive employment picture goes against the economy as a whole in the first three months of 2018, which grew at its a weakest annual rate in five years, leading to a hold on interest rates by the Bank of England in May. However, with this new employment data, the BoE may need to gradually raise interest rates over the coming years, which could affect the pound rate positively.

The UK property market is undergoing a major shakeup. The owner of Zoopla, Prime Location and uSwitch (ZPG) agreed to a £2.2bn takeover by the American private equity firm Silver Lake Management. ZPG which is part owned by The Daily Mail and General Trust said that it had received backing from 31% of its shareholders, which led to a 5% gain for DMGT shares on the news about the takeover. Alex Chesterman, founder and chief executive of ZPG, said the terms of the acquisition represented an ‘attractive premium’ that recognised ‘the quality of ZPG's businesses and the strength of its future prospects’. This major investment is likely to facilitate a move towards a completely-online based property buying and selling experience. 

US Dollar – US Markets

Global stocks are on the front foot, as US/China trade tensions ease. The improvements may be a consequence of US president Donald Trump’s order directed at the US commerce department to assist Chinese telecoms group ZTE. The company said that it had ceased operations after being barred for seven years from doing business with US companies. Trump’s order came about following a personal request from China’s president and was seen as a major concession to China. This comes ahead of the latest round of US/China trade talks in Washington this week. 

U.S Secretary of State Mike Pompeo announced on air on Sunday that Washington would agree to lift sanctions on North Korea if the country were to agree to entirely dismantle its nuclear weapons programme. Such a move would most likely propel North Korea towards the kind of economic prosperity enjoyed by South Korea. US president Donald Trump and North Korea’s Kim Jong Un will be meeting on 12th June in Singapore. Such an encounter would be first of its kind between a sitting US president and a North Korean leader. “We can create conditions for real economic prosperity for the North Korean people that will rival that of the South,” said Pompeo.

Euro – European Markets

European focus will be placed on the final Italian government decision. The Italian Five Star Movement and the Northern League are very close to agreeing a new government, however the choice of Prime Minister is still undecided. Whatever the outcome, it is not looking too good for the European Union, as a new government is likely to cut taxes and pension reforms and is also likely to be issuing a quasi-parallel currency (domestic currency that is issued by the state as an official second currency alongside legal tender currency, the Euro in this case). The Northern League leader Matteo Salvini is not a fan of the EU and has in the past said that Italy should look to break free from its austerity measures and discount the bloc’s 3% budget deficit limit. 

Following the US president Trump’s decision to pull the US out of the 2015 Iran nuclear deal, European foreign ministers are preparing for their meeting tomorrow with Iranian counterpart Javad Zarif.  A solution that would salvage the deal is anticipated to come out of the meeting, otherwise crude oil prices and the situation in the middle east is likely to be put under increasing pressure. 

What’s coming up? 

UK: The main data rolling out of the UK tomorrow will come in a form of average earnings figures, followed by the inflation report hearings, which will examine the expenditure, administration and policy of HM Treasury, HM Revenue & Customs, and associated public bodies, including the Bank of England and the Financial Services Authority.

US: The US markets will be focusing on April’s retail sales figures coming out tomorrow, USD rate is vulnerable to this data. FOMC members Williams and Kaplan will be giving speeches. 

EU: Important European Central Bank speeches will be taking places throughout the day, which will be the main Euro focus for today. Whilst tomorrow , we will see the Gross Domestic Product (GDP) figures coming out, the Euro rate is likely to shift based on this data.