No sterling recovery despite political clarity

3 July, 2017

Ashley Finill

Last week the house of commons voted to support the Government’s legislative agenda for the next two years, with the Democratic Unionist Party giving the Conservatives their backing following the “confidence and supply” deal which was made at the start of last week. Sterling has suffered Since the general election was announced at the end of April with the Pound losing over 6 cents on the Euro. Now the conservatives are able to now form a government with the DUP it was expected that Sterling would make some gains against the Euro. However this has not been the case as of yet as seemingly investors of the Pound are still hesitant to buy into Sterling which keeps it in its fragile state. Now with the focus shifting to the Brexit process the markets will continue to react when information is released, which again could be bad news for Sterling.

Today there a few data releases to take note of that should create volatility in the currency market. Starting in the Euro zone at 9am Markit manufacturing PMI will be announced which is expected to remain the same figure 57.3. At 9.30am the UK also release markit manufacturing figures. at 10am back to the Euro zone as the unemployment rate for May is announced, the figure is expected to decrease by 0.1% to 9.2%, should this be correct then expect the Euro to gain on its competitors. In the afternoon at 2pm over to the US release ISM manufacturing, ISM prices paid and Construction spending. In the late evening New Zealand release NZIER business confidence.

Here is a list of the data releases throughout the week.

01.30 – AUD – Retail sales
04.30 – AUD – RBA rate statement
04.30 – AUD – RBA interest rate decision
08.30 – UK – PMI construction
09.00 – EUR – Producer price index
10.00 – UK – Inflation report hearings
13.30 – CAD – Markit manufacturing PMI

07.00 – EUR – Non-monetary policy’s ECB meeting
08.00 – EUR – Markit services & Markit PMI composite
14.00 – USD – Factory orders
15.00 – USD – Fed monetary policy report
18.00 – USD – FOMC minutes

01.30 – AUD – Trade balance , Imports & exports
11.30 – EUR – ECB monetary policy meeting accounts
12.15 – USD – ADP employment change
12.30 – USD – Trade balance, jobless claims
14.00 – USD – ISM non- manufacturing
14.00 – UK – NIESR GDP estimate
23.30 – AUD – AIG performance of construction index

05.45 – CHF – Unemployment rate
12.30 – USD – Nonfarm payrolls, average weekly hours, Unemployment rate and labor force participation rate
12.30 – CAD – participation rate, net change in employment and unemployment rate
14.00 – CAD – Ivey purchasing managers index