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Markets continue to digest Super Thursday

Sterling has been pushing recent highs, with expectations that the UK may hike rates sooner rather than later. However, following a fairly dull Thursday, with no change to the Bank of England’s voting (7-1), and minor changes to inflation and growth forecasts, these expectations have waned. There will, no doubt, be further speculation tomorrow when we see the most recent inflation reading, expected at 2.6%, which is close to the Bank of England’s expected peak of 2.8%. 

Further speculation on increases to the base rate could support Sterling in the short term, as could the prospect of an even larger election victory for Theresa May.  In the longer term, however, as Brexit negotiations take hold, Sterling will no doubt continue to have a bumpy ride.

Meanwhile, European political risk seems to be less of an issue, with German chancellor Angela Merkel’s conservatives winning a surprise victory in the regional election in Germany’s most populous state. With Emmanual Macron winning the French presidency, and the chances of a surprise in the German elections falling, the Euro could find further favour, particularly as economic data improves and talk continues of a reduction in stimulus by the European Central Bank.

Aside from the political storm being caused by Trump with the firing of FBI director Comey, US rates continue to be the key focus of markets.  As we approach the 14th June decision from the US, significant weakness will need to appear to put off expectations of a hike, with markets currently pricing in almost 100% chance of a hike.  We have limited high tier data this week from the US with initial jobless claims on Thursday being the highlight.



  • UK Prime Minister May Speaks



  • Australia RBA Meeting Minutes
  • UK Inflation Rate
  • Eurozone GDP Growth Rate
  • German ZEW Economic Sentiment



  • UK Unemployment Rate
  • UK Claimant Count
  • Eurozone Inflation Rate



  • UK Retail Sales
  • Eurozone ECB Monetary Policy Meeting Accounts
  • US Initial Jobless Claims



  • UK CBI Industrial Trends
  • Eurozone Consumer Confidence
  • Canadian Inflation Rate