Britain’s decision to leave the EU unsurprisingly continued to dominate the papers this weekend. The markets also continued to re-appraise their GBP forecasts, with some strategists predicting that GPB/USD could be as low as 1.20 by year-end. We have also seen both the UK major political parties in increasing turmoil, as Jeremy Corbyn refuses to resign from leading the Labour Party, and the Conservatives leadership race intensifies with Michael Gove and Theresa May emerging as front-runners. We can expect political risk to remain a key focus, as process for selecting the next UK Prime Minister gathers pace.
On Tuesday morning, the markets’ focus will be on Mark Carney, as he tries to further unpick the economic implications of the EU Referendum. There will be particular attention paid to the language Carney uses, as well any indication that the Bank of England are preparing to cut interest rates. If the tone is similar to last week’s conference, we can expect to see sterling under further pressure.
This will be a quiet day for data, however the market will being watching US ISM Non-Manufacturing PMI as it is a leading indicator and particularly significant when scheduled before the Non-Farm Payroll. We could see plenty of market reaction if it registers at an unexpected figure.
The European Central bank will be the main focus on Thursday as we receive the minutes from the latest meeting of the ECB Board. This should give the markets valuable insights into the European economic conditions influencing ECB's policy and decisions, such as when to set interest rates and the ongoing risk to stability caused by Brexit.
This will be a day dominated by labour data. After last month’s shocking Non-Farm figure which registered at 38K, there will be intense scrutiny on this month’s reading. The median forecast is for a 175k-185k rise in June’s Non-farm Payrolls. The 6-month average is 170k. The 12-month average is 200k.