What’s been happening?

Pound Sterling – UK Markets 

The British pound was able to post modest gains against both the dollar and the euro on Friday supported by the latest GDP growth data from the UK.

The Office for National Statistics announced that the real economy in the UK expanded by 0.5% on a quarterly basis in the first quarter to match analysts’ estimate. Moreover, the annual growth rate remained steady at 1.8% as expected. Touching on the underlying details of the data, “The strong growth in manufacturing is consistent with an increase in activity ahead of the UK’s originally intended departure date from the European Union, and relates to the timing of deliveries from manufacturing businesses to their customers. However, we are unable to clearly quantify the effect of this,” the ONS noted.

Other data from the UK revealed that the current account deficit widened to £30.45 billion in the first quarter and the total business investment declined by -1.5% on a yearly basis in the same period.        

US Dollar – US Markets

With investors refraining from making large bets ahead of the critical meeting between President Donald Trump and his Chinese counterpart Xi, the US Dollar Index stayed relatively calm and closed both the day and the week virtually unchanged.

The monthly data published by the U.S. Bureau of Economic Analysis on Friday showed that inflation, as measured by the core Personal Consumption Expenditures (PCE) price index, rose 1.6% on a yearly basis in May to match the previous reading and the market consensus. Other data showed personal spending and personal income increased by 0.4% and 0.5%, respectively, on a monthly basis.

Later in the day, the University of Michigan’s Consumer Survey showed that the Consumer Confident Index improved to 98.2 in June to come in slightly better than the market expectation of 98.  "June's small overall decline was entirely due to households with incomes in the top third of the distribution, who more frequently mentioned the negative impact of tariffs, cited by 45%, up from 30% last month," said Surveys of Consumers chief economist, Richard Curtin. "Most of the June slippage was concentrated in prospects for the national economy, with the unemployment rate expected to inch upward instead of drifting downward in the year ahead."

Over the weekend, President Trump announced that they have decided to hold back tariffs on Chinese imports and added that China will buy more U.S: farm products. Although a trade- truce was expected and largely priced in, the improved market sentiment could help the T-bond yields gain traction and support the greenback. 

Euro – European Markets

There were no macroeconomic data releases from the euro area on Friday and the shared currency stayed in a consolidation phase. On Saturday, German news outlet Die Welt reported that the EU leaders will vote against conservative German candidate Manfred Weber the European Commission’s presidency.  

What’s coming up? 

UK: The IHS Markit will release the final version of June Manufacturing PMI. Other data from the UK will include consumer credit change, mortgage approvals, and M4 money supply.

US: The ISM and the IHS Markit will be both publishing the Manufacturing PMI figures. The U.S. Census Bureau is scheduled to release construction spending data on Monday as well. 

EU: The European economic docket will feature the IHS Markit’s Manufacturing PMI reports for Germany and the eurozone, the Destatis’ German unemployment figures, as well as the European Central Bank’s private loans data.