Currency Note

A busy week for data releases and central bank speeches

By Alex Bennett July 4th, 2022

The pound is still weaker against the dollar and trading around the same levels against the euro this morning, after a small rebound at the end of last week.

It’s a busy week ahead for economic data releases, with PMI figures expected across the board. This data will give an indication of how the UK, US and EU economies performed in June.

The Federal Reserve will release the minutes from its latest meeting on Wednesday, which will provide further clarity around the Fed’s thinking behind monetary policy.

Several central bank officials will speak throughout the course of the week from the Bank of England, European Central Bank and Federal Reserve. The markets will be listening for any comments about inflation and interest rates.

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GBP: BoE officials to speak this week

The pound rebounded and recovered against the euro on Friday and is trading around the same levels this morning. It is weaker against the dollar after falling throughout the course of last week.

Manufacturing PMI released on Friday afternoon showed that growth in the sector fell to a two-year low in June, largely due to inflation pressures and low business optimism.

This week, PMI figures for the services sector will be released, as well as composite figures, which give an overview of both manufacturing and services. Both are expected to remain in expansion territory and show no change from May’s reading.

Several Bank of England officials will speak throughout the course of this week and the markets will be listening closely to any comments surrounding inflation and interest rates.

GBP/USD chart over past year

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EUR: Euro weaker ahead of PMI figures

The euro is weaker against the dollar this morning, after falling towards the end of last week.

Data released on Friday revealed that eurozone inflation surged to a record high in June, supporting expectations that the European Central Bank will hike interest rates this month.

A series of PMI data is expected for the eurozone this week, which will provide an indication of how the Bloc performed in June.

There will also be a series of speeches from European Central Bank officials, including President Christine Lagarde on Friday. The markets will be listening for any further confirmation of upcoming interest rate hikes.

USD: Dollar strong as growth fears persist

The dollar remains strong against most currencies this morning as it continues to benefit from its status as a safe haven currency.

Fears of slow economic growth are supporting the greenback. These fears were heightened after data released on Friday, which showed that U.S. manufacturing activity slowed more than expected in June, with a measure of new orders contracting for the first time in two years.

Minutes from the Federal Reserve’s latest monetary policy meeting will be released on Wednesday, providing further clarity on officials’ thinking behind monetary policy and interest rates.

On Friday, Non-Farm Payrolls will be released, indicating how the US economy performed in June.

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