The next 5 days could be very important for a number of currencies but in particular the pound. Not only are we in the penultimate week before we find out who will be the next UK prime minster but we also have 3 major reports scheduled on consecutive days.
This week could be pivotal for the pound just as many institutions are beginning to shift their view on the Bank of England from one of a neutral/mildly hawkish to one which sees the next move in rates as lower. The economic outlook of the UK has been declining noticeably the last few months. Manufacturing and construction are firmly in contraction while the hugely important services sector is stagnating.
This week holds 3 key reports for the UK which could easily define whether the BoE are pressured to tilt toward the dovish side. First up on Tuesday, the next employment report is due, this is followed by inflation numbers on Wednesday and finally, retail sales on Thursday. These reports provide crucial insight into the major areas of the UK economy – the health of the consumer, labour market and price pressures. No doubt the pound will be vulnerable to strong price swings depending on how the reports pan out.
Elsewhere, US retail sales will be one of the major data points investors watch out for. This should provide the next piece of the Fed interest rate puzzle which should be nearly to completion it time for their next meeting at the end of this month.
Written by Viv Savani. 8:42am, July 15th 2019
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