GB Pound
What happened last week?
↓ Cable depreciated in the latter half of last week on the back of cooling headline CPI and an interest rate announcement which saw the two members vote for a rate cut.
What to watch for in the short-term?
↓ With 14bp of rate cuts priced in August, markets are still undecided on which month the BoE will vote for its first cut. For Cable, any suggestions that the Bank of England is going to wait until September’s meeting could drive Sterling higher in the near term.
What about the coming months?↓ With the latest polls showing Labour as the favourite going into the July 4th election, the Pound may benefit from a premiership committed to improving its ties with the EU.
Calendar
Friday 7am | GDP (Q1)
US Dollar
What happened last week?
↑ The Dollar has been the save haven of choice ahead of the first round of French elections on Sunday.
What to watch for in the short-term?
↑ In the US, PCE data on Friday will be the key driver of EURUSD price action ahead of the elections on Sunday. Currently consensus for MoM PCE is 0.1% so a surprise to the upside combined with the dollar flows from the political uncertainty in France could push EURUSD lower.
What about the coming months?
↑ Away from EURUSD, markets are keeping a keen eye on the Yen with comments from Japanese currency officials suggesting the government is ready to intervene 24/7.
Calendar
Thursday 1.30pm | GDP (Q1)
Friday 1.30pm | PCE (May)
Euro
What happened last week?
↓The single currency made a move lower last Tuesday despite inflation data coming in line with expectations and unchanged from the moth before (HICP at 0.2% MoM in May).
What to watch for in the short-term?
↓ The key risk for the single currency in the near term is the French elections taking place on June 30th and July 7th. In the latest set of polls Marine Le Pen’s RN party remains in the lead (35%) while the popularity of Macron continues to decrease.
What about the coming months?↓ As seen with the punishment GPBUSD took in the first half of 2016 as Brexit popularity increased, a win for the far-right party would likely weaken the unity of the EU and therefore the Euro.
Calendar
Sunday | French election round one
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