Sterling remains on uncertain ground

As the EU Referendum vote for the UK gets closer, poll results are having more impact on the Pound. Markets opened this morning and saw Sterling fall to an 8 week low against the Greenback. Over the weekend, a recent ORB poll for the Independent showed the leave vote leading with 55%, while the stay vote was now at 45%. The poll of over 2,000 respondents, further highlights the fact that more people are in favour of leaving the EU. This uncertainty has weakened the Pound, with losses seen against all its major peers. With only ten days left until decision day, we should expect further swings to be seen for Sterling. 

There will be no high tier data releases from the UK, US and the Eurozone. China’s yearly Industrial Production figure was released early this morning, which remained constant at 6%. This disappointed as the gauge was expected to increase to 6.1%. Retail spending in the world’s second largest economy slowed to 10% from 10.1% from the previous year. This reveals that China is still a cause for concern as economic data continues to be on a downward trend. 

Tuesday 

UK’s yearly inflation figure will be under scrutiny this morning, with inflation currently at 0.3%. This figure is expected to increase to 0.4%, if this is seen it could provide the Pound with some much needed support.  However, if this falls below 0.3%, Sterling could be under pressure once again. In the afternoon, the US Monthly Retail Sales figure is set to be released. Retail Sales in the States are forecast to drop from 1.8% in April, down to 0.4% for May. This is just before the Fed meeting on Wednesday evening which could again support evidence for the Fed to continue to delay the impending rate rise. 

  • UK CPI y/y
  • Euro Industrial production m/m
  • US Retail Sales m/m

Wednesday 

Tonight’s Fed meeting will be the day’s main focus. Investors will be looking for further guidance as to when the FOMC will raise rates. Market’s will be keen to find out if this month’s poor labour data will have an effect on the Fed’s tone. The FOMC statement will be closely monitored as investors look to see if the Fed’s dovish tone continues. Earlier in the day, labour data from the UK will be released with the Unemployment Rate expected to stay constant at 5.1%. The Average Earnings figure is also scheduled to be released, with the reading expected to slow from 2% to 1.7%. 

  • UK Average Earnings Index
  • UK Unemployment Rate
  • US Industrial Production m/m
  • US Fed meeting

Thursday 

On this day, the US and the Eurozone will give further insight into inflation figures. The yearly figure from the Eurozone is expected to remain in deflationary territory at -0.1%.  The US monthly gauge is due to drop to 0.3% from 0.4%. The main focus of the day will be on the UK and the Bank of England who are set to release the rate vote and policy summary. The vote to keep rates on hold is forecast to remain at 9-0. This will be the policy summary in which markets look to for further details on how the Central Bank will tackle the Brexit concerns. 

  • UK BoE Rate decision
  • UK Monetary Policy Summary
  • Euro CPI y/y
  • US CPI m/m

Friday

The week comes to a close with very little economic data releases.  In the afternoon we gain further insight into the US housing market with the release of building permits and housing starts, with both forecast to register a gain of around 1.15m. 

  • US Building Permits
  • US Housing Starts