Bad Week For UK Data

Last week was another flat one for the pound with both GBP/EUR and GBP/USD trading within a 1% range. Every data release last week disappointed for the UK and as such there was no positive catalyst to see any improvement in exchange rates. All PMI figures dropped from last month’s results, and Industrial & Manufacturing production, in particular, weakened the pound on Friday. Analysts had been expecting growth figures of around 0.2% in each sector but actual results showed a contraction of 0.1% and 0.2% in the month of May. This data is consistent with the recent slowdown in growth in all UK sectors and comes as little surprise.

Friday afternoon was the big unemployment announcement from the US and results produced a mixed bag with better than expected Non-farm payroll figure of 222k, up from 152k last month, but with an unexpected increase in the unemployment rate that has now increased to 4.4% from 4.3%. Market reaction was therefore much more muted than usual after this release, with the USD making small gains overall. The Euro remains in pole position in the currency markets, even more so after the ECB minutes last week confirmed that they had discussed tightening monetary policy, beginning with reducing their asset purchase programme when the timing is right.

The week ahead has potential for more volatility than has been seen in recent weeks, with the next round of key data releases for the UK. Sterling however remains in a negative trend and has as much risk of dropping lower as it has of making any small recoveries. The week ahead includes an Inflation Report Hearing on Tuesday and Unemployment and average earnings on Wednesday for the UK. See below for a list of all this weeks’ announcements to watch out for:

Tuesday:
11:00am – UK Inflation Report Hearing

Wednesday:
9:30am – UK Unemployment Rate / Average Earnings
11:00am – Euro-zone Industrial Production
3:00pm – Bank of Canada Rate Decision

Thursday:
1:30pm – Producer Price Index / Jobless Claims

Friday:
1:30pm – US Retail Sales / Consumer Price Index