GBP: Lack of data prevents an upside
Yesterday’s wage data was unable to fire up the pound as the drop in unemployment was muted by lower average earnings. GBP/USD remains precariously balanced around the 1.29 level and GBPEUR is holding onto the low 1.15 range.
Considering GBP/USD began the year with highs of 1.3380, it could be a tough summer as we plummet through the ranges. GBP/EUR also remains sickly after dropping away from 1.18 in March with little signs of recovery.
Theresa May has challenged Jeremy Corbyn to get on with choosing sides regarding her Brexit compromise as she prepares for the Commons vote in early June.
USD: Markets glued to Twitter
There is a slight hint of improved risk sentiment throughout the markets, with various indices attempting to recover during yesterday’s afternoon trading hours. Trump’s tweet yesterday: “When the time is right we will make a deal with China” helped to reduce the temperature between the two countries, however, there is a growing concern that the rise of nationalist attitudes will prevent logical communications. China is basing part of their decision making process and reactions on pride and principal. This means that they are unwilling to make lawful changes to release the deadlock. Once the financial implications intensify then it will be a case of who cracks first.
US retail sales from April are released at 13:00 BST – whilst there is an appetite to see a bounce back in the retail sector following a strong March, this data remains fairly unreliable.
EUR: Threat to the automotive industry
Saturday 18th May is the deadline for Trump deciding on possible tariffs on European vehicles. Whilst markets don’t expect him to go ahead, it adds another avenue of risk to the economy.
Eurozone GDP is due out at 10:00 BST with expectations that year on year and quarterly growth remains flat at 1.2% and 0.4% – generic concerns about an economic slowdown still find ways to drop into conversation.