Macroeconomic Situation of Both Economies.
Key and leading macroeconomic indicators and their impact on each of the currencies that make up the currency pair.
British Pound (GBP):
The British Pound declined against the Euro and Dollar following the release of the UK's latest employment figures, which showed job losses and rising unemployment. However, the losses are expected to be limited due to persistently high wage increases and the anticipation of next week's crucial inflation report.
These pay rates are inconsistent with the Bank of England's mandate to sustainably bring inflation back to 2.0%. Both rates of pay growth could be seen as too high to justify a rate cut from the Bank of England in August. The BoE will be extremely cautious about cutting rates during a period when consumer spending power is high, as this could potentially trigger a new wave of inflation.
If the unemployment rate continues to rise in the coming months, the pressure on wages will start to wane, potentially leading to a decrease in domestic core inflation rates. This scenario would give the Bank of England more confidence in considering interest rate cuts.
The overall balance of employment data remains robust, but the negative effects of the restrictive policy implemented by the Bank of England are becoming increasingly noticeable. This is also reflected in negative data on retail sales, industrial and manufacturing production, and of course, stagnation in GDP.
Next Wednesday and Thursday, we will have inflation data and the interest rate decision. Until then, the British Pound is expected to remain in a stable zone without significant changes.
~NEXT WEEK:~
Wednesday, June 19, 2024
Core CPI (YoY) (May)
CPI (YoY) (May)
Thursday, June 20, 2024
BoE Interest Rate Decision (Jun)
Friday, June 21, 2024
Core Retail Sales (YoY) (May)
Manufacturing PMI Services PMI
U.S. Dollar (USD):
The markets do not fully believe that the US economy will weaken enough for the Fed to change course and start cutting interest rates. There is still a lot of uncertainty.
Powell has indicated that if the economy remains strong and inflation persists, the Fed is prepared to maintain the current target range of rates for as long as appropriate. Conversely, if the labor market unexpectedly weakens or if inflation falls more rapidly than anticipated, the Fed is ready to respond.
~NEXT WEEK:~
Tuesday, June 18, 2024Retail Sales (MoM) (May)
Thursday, June 20, 2024Initial Jobless ClaimsBuilding Permits (May)
Friday, June 21, 2024Existing Home Sales (May)Services PMI (Jun) Manufacturing PMI (Jun)
CONCLUSION:
- GBPUSD: RANGE TO SLIGHTLY BEARISH
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GBPUSD. Q2M3W3. Global Macro Analysis
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WW3 in Q2, got it. Nvidia calls it is.