Top Currency Pairs Monday 13th June 9:00 UTC GBP/USD: 1.22207 (Last Week: 1.25737) EUR/USD: 1.04768 (Last Week: 1.07509) GBP/EUR: 1.16645 (Last Week: 1.16954)
Pound Sterling Last week saw Boris Johnson win the vote of no confidence, leaving him to be unchallenged for another year. Despite the victory, questions still remain after 148 of his MPs voted against the PM, leaving the Pound in a very precarious position. UK PMI figures were however able to give the Pound a nice boost, with business activity not as bad as initially feared in May. Looking ahead, economic data released today will see a 3-month GDP update for the economy. It is expected to show growth of roughly 0.4%, and a lower figure would increase the threat of stagflation. The British economy does seem to be lacking in growth compared to other major areas after the OECD warned that the UK would be the worst-performing developed nation next year besides Russia. In focus is the Bank of England (BoE) interest rate decision this Thursday, where a .25% increase is expected. This would lift the central bank rate to its highest level of 1.25% since 2009, following the global financial crisis.
Euro The European Central Bank (ECB) rate hike picture became more evident last week with a rate hike set for July, with potential for further increases in September. The inflation outlook was predicted to be 6.8% for 2022, falling soon after. Despite this dovish approach from the ECB, which temporarily faltered the Euro against other major currencies, the markets are predicting a more aggressive year-end. The headline figure this week will come from Germany in the form of inflation figures, forecast to jump another 0.5% from the 7.4% recorded last month. A higher number would see criticism of the ECB who are acting more passively to tackle inflation compared to other central banks.
U.S. Dollar The Dollar was given a boost last week with rising US treasury yields on Tuesday. Risk appetite also gave the Dollar a leg up as the Pound posted a second consecutive week of declines against the greenback. Along with the Bank of England (BoE), the Federal Reserve (Fed) will also be announcing its June interest rate decision on Wednesday, a day before the BoE, when Jerome Powell briefs the press following the two-day meeting. It is widely expected that the US central bank will act more aggressively than its UK counterpart, with a .5% hike in the picture. May inflation data from the US raised speculation that Fed officials will tighten even quicker, with more emphasis on forecast future rate hikes.
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