Pound losses continue as Amber Rudd resigns
What’s been happening?
GBP: GDP release on Friday last week came in lower than expected for both the quarter and yearly figures. GDP fell to the lowest level since 2012 and has been a significant influencer in the reduced expectation for the BoE to increase rates. Pound losses have continued into European trading this morning due to the resignation of Amber Rudd.
EU: Eurozone GDP is set for release Wednesday this week and of late, the general signs from the EU have not been good. German figures have been poor, European car sales are down and there has been no real guidance on when the ECB will pull back on their QE policy. The GDP figure is expected to increase on the quarter, but with poor data of late coming from Europe, a lower than expected 0.6 could trigger further euro weakness.
US: The FOMC meeting will occupy news this week. No rate change is expected but will the 93% expectation of a rate hike in June be dampened by the banks language and guidance on Wednesday? This will be key. Data from the States has been strong recently and any printing close to 200K by non-farm payrolls on Friday this week could help the dollar gather more pace.
What’s coming up?
UK: Not a lot of data from the UK today. The BoE will publish remarks from member Haldane and markets will be focused on PMI data released in the form of manufacturing tomorrow and services on Thursday. There will also be a keen focus on local elections on Thursday with Prime Minister May bracing herself.
US: Key data from the States this week comes in the form of the Fed Reserve’s interest rate. This is delivered at 7pm Wednesday evening. No change is expected but the market will look at the language used and any guidance on the next rate rise expected this June. Tomorrow will also see manufacturing numbers.
EU: German inflation is released this afternoon with the overall inflation figure for the eurozone released Thursday. Both are key figures and have the potential to impact the euro.
JPY – The Bank of Japan leaves the key short-term interest rate on hold at -0.1% as expected but reduce their target date for achieving 2% inflation.
AUD – Even though the Aussie sits at four-month lows, it formed a slightly fightback against the dollar last Friday. However, the greenback momentum still stays firm due to solid economic data of late. Tomorrow the RBA will meet to discuss their rates, and trade balance figures are expected Thursday. Bullish news from the Fed on Wednesday could also push AUDUSD lower when the bank meets to discuss their interest rates.