Monthly Archives: June 2024

A busy day ahead as markets eagerly await the Bank of England policy announcement.

The announcement takes place this afternoon at midday, where it is very much expected that the Bank will leave interest rates at 5.25 percent.

Markets are pricing in about a 30 percent chance of an August rate cut, meaning there is scope for some movement in GBP today.

The key focus will be on the comments that follow today’s rate announcement and how MPC members vote.

The potential movement will come from how the members will vote and the majority that want rates to be cut.

Later this afternoon, we have the US employment figures and EU consumer confidence figures.

To finalise a very busy week, tomorrow we have the UK retail sales figures and EU PMI.

In the afternoon we have the US existing home sales numbers. 

Early this morning the UK released the Consumer Price Index report. As expected, inflation has fallen to the 2 percent target set out by the Bank of England.

Markets have reacted positively to this release with the pound gaining ground against both the euro and the dollar.

There is no more economic data of relevance today, so focus will shift to Thursday. The Bank of England will release their Interest rate announcement which is expected to come in unchanged at 5.25 percent.

Investors will be keen to tune into the meeting minutes to see how the Bank of England view this morning’s inflation release.

Following this, Employment figures in the US will be announced, forecasts are projecting a drop in Unemployment Claims week on week to 235k (from 242k).

Towards the back end of the week, we have the UK retail sales whereby markets are predicting strong growth jumping to 1.5 percent (from -2.3 percent).

Purchase Manager Index will also be released on Friday morning, with strong figures being forecasted for the Eurozone.

On the currency front, the pound has continued to hold its highs against the euro, with the pound also showing strength against the dollar.

In today’s economic calendar there is a mixture of key data releases that the markets will be keeping a close eye on.

French CPI inflation is forecasted to come in higher at 2.6 percent (previous 2.4 percent).

This afternoon, US retail sales is a big focus. It is expected the change in the total value of sales by retailers in the USA will rise by 0.3 percent month-on-month. This will be a positive sign for the Fed and the US economy. Furthermore, it will also support their hawkish stance to maintain interest rates at 5.5 percent.

Last week, US inflation figures came in above 3 percent. This further reinforced the Feds latest actions and that they are happy to keep interest rates at their levels to help lower inflation and mitigate upside risk to prices.

Pound Sterling has lost most of its gains sustained over the last week against the Euro and Dollar in the lead up to important inflation figures tomorrow.

The Bank of England monetary policy decision on Thursday will be closely monitored for clues on any forward guidance.

UK CPI inflation is expected to come in at the Bank of England target rate of 2 percent. If this is the case, it will put pressure on the Bank of England to cut interest rates.

A quiet start to the week with only the NY Fed Empire State survey due.

Tomorrow, we have the German ZEW Business Confidence numbers followed by the US retail Sales & Industrial Production figures.

Markets will also turn their attention to the UK CPI and Retail figures on Wednesday.

The Bank of England interest rate announcement takes place this Thursday.

The pound has dipped since last week’s highs against the euro and dollar. Most of last week’s movement came following the French snap election. France will remain the main source of interest for the euro over the coming weeks.

The pound weakened off on Friday against most major currencies as concerns peaked ahead of this Wednesday’s inflation report and Thursdays Bank of England policy announcement.

This Thursday, the Bank of England policy announcement will be closely watched for signals of any rate cuts. It is now expected that we will see an August rate cut.

Comments that follow the Bank of England policy announcement will be key and could result in sterling volatility.

To cap off a busy week, on Friday we have the UK retail sales and PMI figures for the EU and UK. 

Today there is no UK economic data being released, therefore attention will shift to policymakers’ speeches from the European Central Bank and French CPI inflation figures.

In the European Union, French EU Harmonized CPI released below the market consensus (2.7 percent) at 2.6 percent.

Investors will keep a close eye on the speeches from the ECB policymakers today, to gauge a better understanding on future rate cuts after they reduced interest rates by 25 basis points to 4.25 percent during last week’s monetary policy meeting.

Following the European Central Bank’s decision to cut interest rates last week and the political uncertainty in the Eurozone, it has boosted GBPEUR to find a resistance level and move to a 22-month high.

This presents a great opportunity to fix any euro exposure and ‘hedge’ to protect yourself against any adverse market movements and minimise risk exposure.

Pound Sterling has been volatile against the Dollar over the last few days. On Wednesday, US CPI inflation released below the market expectation at 3.3 percent resulting in GBPUSD moving to a 10-month high however the dollar has recouped most of its losses this morning.

The lack of UK economic data has resulted in Pound Sterling being one of the best performing currencies in the G10 this week.