The Pound took a tumble at the weekend as speculation continued to grow as to the number of no confidence letters which have been sent to the 1922 Committee. It is believed almost 40 letters have been received stating the writer has no confidence in current UK Prime Minister, Theresa May. The Committee need to receive 48 letters to spark a leadership contests. However, former Conservative party chairman, Grant Shapps has suggested May sets a date for her departure. Cabinet Minister, Liam Fox believes it would be ‘foolish’ for the party to remove May from the post, stating how it would be ‘foolish to do anything to destabilise the government.’
The Greenback continued to regain some of the week’s losses on Friday, as US President Donald Trump expressed his desire for a stronger Dollar, in the most anticipated speech at Davos. The Dollar declined on Wednesday, as US Treasury Secretary, Steven Mnuchin commented on a weaker Dollar being better for the US. However, on Friday both himself and Trump talked up the Dollar, with Mnuchin mentioning they ‘fundamentally believe in the strength of the Dollar.’
There is a quiet start to the week as the markets continue to digest last week’s events. The US will be releasing the Core Personal Consumption Expenditure price index alongside the personal spending figure for December.
The Eurozone will release their Prelim Flash GDP on Tuesday, expected to post 0.6%. Spain will be releasing their individual version of the figure, forecast to post 0.7%, whilst Germany will be releasing their prelim CPI, expected to post -0.5%. Back in the UK, the net lending to individuals figure will be released, forecast to post 4.8b. Bank of England Governor, Mark Carney will be testifying before the House of Lords Economic Affairs Committee in the afternoon. Across the pond, the US will be releasing the Conference Board Consumer Confidence report.
Wednesday will be the busiest day of the week, starting with US President, Donald Trump delivering a speech titled ‘The State of the Union Address.’ The market will continue to focus on the US over the course of the day, as they are set to release the ADP Non-Farm Employment Change, expected to post 191k. In the evening, the FOMC will release their latest Monetary Policy statement alongside the rate decision. The Fed are not expected to hike rates and it is not expected that there will be any big decisions made, as this is Janet Yellen’s last meeting as Chair of the Federal Reserve. The Eurozone is expected to release their CPI Flash Estimate which is expected to drop slightly to 1.3%. Germany is expected to release their Unemployment Change figure, which is forecast to post -20k, as well as their Retail Sales figure, expected to decline to -0.4% from 2.3% last month.
As the start of a new month, Manufacturing PMIs will be the focus of Thursday. The Eurozone will be the first to release their final Manufacturing PMI figures, with individual versions being released from Italy, France and Germany. Back in the UK, the Manufacturing PMI for January is expected to increase slightly to post 56.6. Across the pond, the US will release the ISM Manufacturing PMI, forecast to drop slightly to 59. The Weekly Unemployment claims will also be released alongside the Prelim Unit Labour costs and Non-Farm productivity.
Friday will be a busy end to the week, as the UK release their Construction PMI, expected to post 52.1. Across the pond, the US January Labour data is set to be released. Non-Farm Employment change is expected to bounce back from the previous month’s bearish 148k, to 184k. Whilst the Unemployment Rate and Average Hourly Earnings are expected to remain static, at 4.1% and 0.3% retrospectively. The revised University of Michigan Consumer Sentiment will be posted, forecast at 95.1. The day will end with the Federal Reserve Bank of San Francisco President, John Williams speaking on the US Economic Outlook at the Financial Women of San Francisco luncheon.