03/07/2017 - Pound Holds Gains Despite An Uncertain Outlook 

GBP

Sterling edged slightly higher on Friday despite data showing British consumers have suffered the longest decline in spending power since the 1970s. The latest figures from the Office for National Statistics paint a bleak picture for consumers who are facing the hit of rising inflation and slowing wage growth.

The pound has risen around 3.2 percent since the start of April - its best quarterly performance in two years and its second straight quarter of gains after six successive losses.It has been boosted by rising expectations that monetary policy could be tightened. It was given a significant lift this week when BoE Governor Mark Carney said a rate rise was likely to be needed as the economy came closer to running at full capacity, and that the Bank would debate this in the coming months.

EUR

With an eye on anti-globalization protests brewing in Hamburg before this week's G20 summit, Chancellor Angela Merkel said on Sunday leaders will have to focus on sustainable and inclusive economic growth rather than their own prosperity.

In her weekly podcast, the German chancellor said this year's G20 summit will delve into issues championed by protesters such as distribution of wealth and consumption of resources - alongside related issues like climate change, free markets, consumer protection and upholding social standards.

Merkel, seeking a fourth term in a Sept. 24 election, outlined the issues as: "What are we doing with our resources? What are the rules for distribution of wealth? How many people are taking part? And how many countries are able to profit from that?". Without mentioning the protests that have German security officials worried about possible acts of sabotage this week in the country's second-largest city, Merkel noted that these non-traditional issues were forced onto the G20 agenda.

In a speech to parliament last week, Merkel promised to fight for free trade and press on with multilateral efforts to combat climate change at the summit, challenging the "America First" policies of U.S. President Donald Trump.

Key Announcements 

09.30 – GBP: Manufacturing PMI; Forecast at 56.4 against previous of 56.7
 
13.00 – GBP: BOE Governor Mark Carney speaking at The Financial Stability Board in Frankfurt
 
15.00 – USD: ISM Manufacturing PMI; Forecast at 55.0 against previous of 54.9