Pound faces another difficult week in busy week of data

Political and Economic risk is still weighing heavily on the Pound as the ramifications of last month’s Brexit vote continue to have a severe impact on the economy and political system of the UK.

On the political front, we expect to see the formal campaigning begin in the governing Conservative Party’s leadership contest. The 150,000 Conservative party members will choose between Theresa May and Andrea Leadsom as the UK’s next prime minister. Across the divide, the former shadow business secretary Angela Eagle is expected to formally launch her challenge for the Labour Party leadership – a move expected to anger and further destabilise the UK’s main opposition party. Jeremy Corbyn has lost the confidence of Labour’s 172 MPs, but remains popular with the party’s membership.  

On the economic front, we can expect key reporting from the Bank of England later in the week, who are potentially poised to slash interest rates close to zero as fears mount over a UK recession.

Further afield, we also have a snap shot of the health of the broader global economy with key readings this week from major commodity producing and consuming nations.

Monday 

  • Eurogroup Meetings
  • US Federal Reserve FOMC Member Esther George Speaks

Tuesday 

The main focus of the day will be on the UK’s Inflation Report Hearings where the Bank of England Governor and several Monetary Policy Committee members testify on inflation and the economic outlook before Parliament's Treasury Committee. 

  • Inflation Report Hearings

Wednesday 

The global commodity market will be the focus of Wednesday with key readings from Canada, a key commodity exporter, and China the preeminent consumer. 

  • Chinese Trade Balance
  • Bank Of Canada Monetary Policy Report and Rate Statement

Thursday 

The major event risk of the week is on Thursday, with the Bank of England expected to slash interest rates to almost zero, as fears mount over a Brexit driven recession. Economists believe the Monetary Policy Committee (MPC) is likely cut rates to a new low of just 0.25pc on Thursday with a 75% chance of more easing. However, Mark Carney has warned of the potential consequences of ultra-low rates. “If interest rates are too low – or negative – the hit to bank profitability could perversely reduce credit availability or even increase its overall price,” he said. So a rate cut isn’t a foregone conclusion and the BoE may hold off until August or beyond.

  • Australian Employment Change and Unemployment Rate
  • Bank of England Rate Decision and Monetary Policy Summary

Friday

There will be further focus on the Global economy, with key readings from the US and China. The Bank of England Governor Mark Carney is also due to speak in Toronto. 

  • Chinese GDP &  Industrial Production
  • Canadian Manufacturing Sales
  • US CPI
  • US Retail Sales
  • BOE Gov Carney Speaks