Sterling begins the fresh week on the back foot following worrying developments on the Brexit front. News on Friday that the latest round of Brexit negotiations saw no progress helped the pound fall against its major counterparts. Sterling racked up losses of almost 3% against the greenback and single currency last week in what was its worst week in over a month.
The new week holds several key tier 1 UK data points for traders and dealers to interpret. Employment, inflation and retail sales reports are all scheduled for release on consecutive days beginning tomorrow. As UK employment reports usually have a significant lag, this week’s report may still not show the full impact of the virus, considering the lockdown began in mid-March. The main focus this week will be on the retail sales report which will highlight exactly how the consumer is reacting to the pandemic.
From the US, Federal Reserve Chairman Powell will testify tomorrow in front of a Senate Banking Committee on the policy measures used to address the economic impact of Covid-19. Also this week, the Fed meeting minutes from April are set for release on Wednesday evening. It was this meeting in which Powell confirmed he would keep interest rates near zero until the Fed was confident the economy had weathered the storm.
Elsewhere, 2 emerging market central banks will hold monetary policy announcements this week. Both the South African Reserve Bank and the Central Bank of the Republic of Turkey are expected to decrease interest rates at their Thursday meetings. This comes despite recent significant losses for both the rand and lira.
Have a good week.
Written by Viv Savani. 9:55am, May 18th 2020
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