What’s been happening?

Pound Sterling – UK Markets 

UK gross domestic product (GDP) in the first quarter of 2018 was revised higher on Friday. The reading of 0.2% exceeded the Office for National Statistic’s (ONS) previous revision of 0.1%. The GDP increase was driven by increased household and government spending, while concerns were raised about the health of the economy by showing that investment fell during the period, and therefore made no contribution to growth. The proportion of household income devoted to savings also fell to 4.1% in Q1, the third lowest level on record. The ONS calculated that the construction industry contracted by 0.8%, having previously estimated that it shrank 2.7%, a revision that helped to boost overall GDP growth by 0.1% point.

EU Brexit negotiator Michel Barnier said on Friday that EU leaders had made some progress in Brexit negotiations, but big differences remained, and he is hoping an upcoming British proposal would be “valuable and workable”. “Now we are waiting for the U.K. White Paper and I hope it will contain workable and realistic proposals but let me mention once again that the time is very short,” Barnier stated.

US Dollar – US Markets

The Chicago PMI hit its highest level in five months in June, data on Friday showed while noting that trade talks are impacting purchasing decisions of many firms. The US Midwestern region PMI index climbed to 64.1 in June from 62.7 previously, and exceeded economists’ expectation, with strengthening orders and sustained upward pressure on prices being the key contributing factors. 

US government bond prices edged higher Friday after the Commerce Department said the personal-consumption-expenditures price index, a broad measure that serves as the Federal Reserve’s preferred inflation yardstick, rose 2.3% in May from a year earlier, reading its biggest annual rise since March 2012. The acceleration in inflation could encourage Federal Reserve officials to make the case that they should raise interest rates at their September meeting. 

Euro – European Markets

German unemployment stayed at a record low in June despite the slowdown of the economic growth momentum and increasing concerns over trade tensions. German unemployment fell for a 12th consecutive month in June, with the number of jobless down 15,000 from the previous month’s level to 2.342 million, beating economists’ expectation, according to data published on Friday by the Federal Labour Agency. 

Eurozone June consumer inflation has risen further and was in line with consensus forecasts, according to the European Union’s statistics agency report released Friday. The increase was largely caused by a global rise in oil prices. The annual inflation rate hit 2% in June, up from 1.9% in May, and an 8% surge in the cost of energy was the biggest contributor. Stripping out volatile items like energy, food, alcohol and tobacco, the core inflation rate declined to 1% from 1.1%. While inflation is now on the mark, the drop in core inflation must leave the ECB slightly unsettled with the exit of QE in mind.

What’s coming up? 

UK: Markets will be focusing on continuing Brexit developments. June Construction PMI will be released tomorrow.

US: The US Markets will be looking at the June Markit Manufacturing PMI out later today and month on month Factory Orders for the month of May out tomorrow. 

EU: Eurozone retail sales data will be published tomorrow, while on Wednesday the Euro markets will be looking at the June Markit Services PMI reading.