This week’s calendar is somewhat light in terms of data from the UK with Tuesday hosting the busiest day for UK data. The pound was clawing its way back against the dollar and the euro until 9.30am when data in the form of the UK’s industrial and manufacturing production was published. Disappointment prevailed as actual figures came in well below forecasted estimates. Despite the UK trade balance narrowing in May, the pound was quickly sold off once again.
As the day unfolded, the IMF published their Global Economic Forecasts and improved the UK’s outlook stating that 0.9% growth for the last half of 2013 (compared to their previous forecast of 0.3%) should be achievable. This was actually the first time since April 2012 that the IMF has raised the expectations of the UK economy. This announcement however did come with a caveat as IMF chief Thomas Helbling went on to say that the economic recovery in the UK is weak.
The GBPEUR rate also increased in the afternoon session as on ECB member, Jorg Asmussen, stated that the ECB’s forward guidance actually goes beyond the 12 months previously stated by the head of the ECB, Mario Draghi. The ECB quickly issued a correction of this statement as it contradicted Mario Draghi’s comments from last week. However reading between the lines, this correction hardly drew a line in the sand as the ECB stated that guidance will go on for an extended period rather than alluding to a specific timeframe.
This news allowed the pound to reclaim the ground lost earlier in the day although the pound finished the day 0.65% down against the dollar. EURUSD levels shot down but did find support at the lows set in November 2012.
Wednesday’s highlight will inevitably be the US Fed’s minutes from the most recent FOMC meeting. Friday’s nonfarm payrolls data was published after the meeting so it will be interesting to see if Bernanke refers to this data and continues his bullish stance on reducing QE which he hinted at last month.
German inflation data released this morning fell in line with expectations increasing from 1.5% to 1.8% in June.
19.00pm – USD – FOMC Minutes.
21.10pm – USD – Fed’s Bernankes Speech