Currency Note

Central bank speeches expected across the board

By Alex Bennett June 27th, 2022

The pound strengthened on Friday morning, before falling towards the end of the day. This morning, it’s trading in narrow ranges against the euro and has strengthened against the dollar.

There will be a series of speeches this week from Bank of England, European Central Bank and Federal Reserve central bank officials.

On Wednesday, a panel discussion featuring ECB President Christine Lagarde, BoE Governor Andrew Bailey and Federal Reserve Chairman Jerome Powell will take place at the ECB’s annual conference on central banking in Sintra, Portugal. The markets are set to listen closely.

Later today, MPs will vote on new legislation to give ministers the power to scrap parts of the post-Brexit deal between the UK and the EU.

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GBP: Pound steady following retail figures

After rising against the euro and the dollar on Friday morning, the pound then weakened towards the end of the day following soft retail sales data.

UK retail sales came in at -4.7% year-on-year in May, which was worse than the expected reading of -4.5%. This was driven by sales in food stores declining by 1.6%.

It’s a fairly light week for data releases, however, final GDP figures for the first quarter of this year are due on Thursday. There will also be speeches from Bank of England officials throughout the week, including Governor Andrew Bailey on Wednesday.

GBP/USD chart over past year

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EUR: Busy week of data for Europe

The euro is trading in narrow ranges against both the euro and the dollar this morning ahead of a busy week for data releases and speeches from central bank members.

European Central Bank President, Christine Lagarde, will speak throughout the week, including at the ECB’s annual conference on central banking on Wednesday in Portugal.

Consumer confidence figures for both Germany and the eurozone will be released on Tuesday and Wednesday. Economic and industrial sentiment figures are also expected on Wednesday, followed by inflation data on Friday, which will reveal the figure for June.

USD: Dollar benefits from safe haven status

The dollar has strengthened against a basket of currencies this morning, benefitting from its status as a safe haven currency. Investors are concerned that high interest rates and poor economic data could mean that a global recession is approaching.

A series of data releases are expected for the US this week, including durable goods orders later today, personal spending figures on Thursday and PMI data on Friday. Manufacturing PMI is expected to show a slight fall in June but will stay in expansion territory.

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