Another poor result for the UK
13 June, 2018
Yesterday news reports were dominated by the events that occurred at the Singapore Summit regarding the historic meeting between Donald Trump and Kim Jong Un. News broke that the pair had signed a document to commit to the start of complete denuclearisation and a peace regime. As the world waits to see what comes from the summit, it appeared to have a rather muted reaction for the currencies markets.
Over all, we saw a flat day for trading. During the morning, the UK posted more negative results for Average Earnings Bonuses with just missed the mark by 0.1% for both MoM and YOY, not a great sign for wage growth which in turn has a direct effect on the Banks decision to raise interest rates – pushing that possibility further away. ILO Unemployment Rate came is as expected, remaining at 4.2% and over all the markets reacted with the Pound losing some ground but not enough for any major concern. In the afternoon a key release came in for US and markets saw Inflation post as better than markets expected. For the month of May, the figure rose to 0.2% as expected, which in turn pushed the yearly figure up to 2.8% from 2.5% previously. Although these results are seen as a positive for the Dollar the rates hadn’t made any big changes – likely due to the fact that an interest rate rise from the Fed has already been priced in.
Today there are more releases for the UK this morning with Retail Sales expected to fall for the month but remain at 3.4 % YOY. Producer Price Index is expected to increase from 0.4% to 1.6% and Inflation due to post a figure of 2.5% up from 2.4%. All releases are 09:30 this morning. The EuroZone follow with Industrial production data and this evening at 19:00 all eyes will be on the Federal Reserve as they post their Economic Projection report which highlights their projections for Inflation and economic growth in the US over the next 2 years. Also at 19:00 the Fed release their latest Monetary policy Statement and Interest rate decision. A rate rise is already expected by markets and has appeared to have already be priced in hence the Dollar taking the lead position of the 3 majors, and investors will be looking for comments made on any potential future actions. Will the Fed hint towards more rate hikes over the course of the year?
New reports have emerged following MP’s met to review the amendments made to the Brexit Withdrawal Bill from the House of Lords, and debates continue today in the house of Commons. The meeting between the Prime Minister and Ministers looks like it was a bit of a mixed result. Reports that Minister Phillip Lee resigned so he could speak freely on the subject of Brexit and its likely more reports will emerge over the coming days on the subject. With the UK still set to exit from the European Union by March 2019, any delays could be extremely damaging for the UK and in turn damage the strength of the Pound. Uncertainty does not bode well with currency so the investor will be watching closely to see how talks develop. Any steps back in talks or continued disagreements are very likely to see rate drop away.
With lots happening and more to come later in the week, if you have a requirement to exchange currency in the short term, do get in touch with our friendly brokers here at Currency Index to discuss how we can help you save money on your upcoming transfers and offer some guidance on the upcoming events which could affect the cost. We offer a variety of ways to help you lock in rates and secure your currency requirements so drop us a call on 01923 725725 to see how we can mitigate your risk.