Currency Note

UK inflation data in focus

By Alex Bennett June 20th, 2022

Following the Bank of England’s monetary policy meeting last week, the pound weakened before making a recovery on Friday. It is still attempting to recover this morning ahead of a week full of key data releases.

The main data release of the week will be UK inflation figures on Wednesday. Inflation is predicted to have risen to 9.1% in May, but any surprise figures could impact the pound.

Sterling could also be impacted by the global markets. A series of interest rate rises over the past week has prompted concern that some economies could fall into recession over the coming months. This could cause the global stock markets to fall in the coming days.

Federal Reserve Chair, Jerome Powell, will testify in front of the US Senate on Wednesday and Thursday. The markets will be listening for any hint of another interest rate hike of 75 basis points in July.

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GBP: Pound continues recovery

After dipping last week following the Bank of England’s monetary policy meeting, the pound recovered on Friday and is trading around those levels this morning.

This week, all eyes will be on key data releases, which are due on both Wednesday, Thursday and Friday for the UK. On Wednesday morning, UK inflation data will be released, whilst PMI data is due to Thursday and consumer confidence and retail sales figures are expected on Friday.

The data is expected to show that inflation rose to 9.1% in May following April’s reading of 9%. Any surprises could impact the pound. Consumer confidence is expected to stay near a record low due to the cost-of-living crisis.

GBP/USD chart over past year

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EUR: PMI figures for Germany and the eurozone this week

After weakening against the dollar last week, the euro is attempting to make a recovery against the dollar this morning.

It’s generally a quiet week for eurozone data. However, PMI figures for both Germany and the eurozone will be released on Thursday, providing an overview of how these economies have performed so far in June. Business climate figures for Germany will be released on Friday.

USD: Powell testimony on Wednesday and Thursday

The dollar is slightly weaker against a basket of currencies this morning. It fell at the end of last week due to disappointing home sales, building permit and manufacturing figures.

More data surrounding homes sales will be released this week and the markets will also be looking to Federal Reserve Chair, Jerome Powell’s, testimony on Wednesday and Thursday.

This follows the Federal Reserve’s monetary policy meeting last week, when the interest rate was hiked by 75 basis points to tackle rising inflation.

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