Last Week’s UK Economic News Review

Sterling fell against the U.S. Dollar but was virtually unchanged against the Euro last week as the BOE left interest rates and stimulus unchanged, concern over U.S. President Trump’s firing of FBI director James Comey might delay Trump’s tax reform plan, and the French presidential elections saw Emmanuel Macron emerge as France’s new president.

The UK economic calendar was light last week, beginning on Monday with the Halifax HPI, which declined by -0.1% m/m versus an expected increase of +0.1%. On Thursday, the BOE left its benchmark Official Bank Rate unchanged at 0.25% and the Asset Purchase Facility at 435B, as was widely anticipated. The voting on the Bank Rate had one dissenter, Charlotte Hogg, who voted for an increase, while the voting for the Asset Purchase Facility was unanimous.

In the central bank’s Monetary Policy Summary, the BOE noted that, “If the economy follows a path broadly consistent with the May central projection, then monetary policy could need to be tightened by a somewhat greater extent over the forecast period than the very gently rising path implied by the market yield curve underlying the May projections.” Other UK data released on Thursday included Manufacturing Production, which declined by -0.6% m/m versus an expectation of -0.2%, and the Goods Trade Balance, which showed a deficit of -13.4B versus an expectation of -11.7B.

The U.S. economic calendar was moderately busy again last week, beginning on Tuesday with JOLTS Job Openings, which showed the addition of +5.74M jobs compared to an expected +5.67M. On Thursday, PPI increased by +0.5% m/m versus +0.2% expected, while Core PPI increased by +0.4% versus an expectation of +0.2%. Weekly Initial Jobless Claims dropped to 236K versus 245K expected. The calendar concluded with Friday’s release of CPI, which increased by +0.2% m/m versus +0.3% expected and Core CPI, which increased by +0.1% versus +0.2% anticipated. Also out on Friday was Retail Sales, which increased by +0.4% compared to an expectation of +0.6% and Core Retail Sales, which increased by +0.3% versus +0.5% expected.

The Eurozone economic calendar was light last week, beginning on Wednesday with a speech by ECB President Draghi, who stated that, “With the French presidential election now out of the way and Eurozone economic data continuing to improve, speculation will likely grow ahead of the next ECB policy meeting as to whether the central bank will soon change tack on monetary policy. We expect the ECB to move cautiously. The June meeting may see the removal of the downside rate bias in the ECB’s forward guidance.” The week concluded with Friday’s release of German Preliminary GDP, which increased by +0.6% q/q as was widely anticipated 

Overall, GBP/USD began the week at 1.2979 and concluded the week -0.7% lower to close at 1.2885. EUR/GBP opened at 0.8482 and closed the week one pip lower at 0.8481; nevertheless, the pair was still 41 pips higher on the week.

Key UK, U.S. and Eurozone Economic Data Releases for the Coming Week

GBP: The economic calendar for the United Kingdom cools down a bit this coming week. Monday has a talk by Prime Minister May, while Tuesday offers CPI, PPI Input and RPI that are due out at 2.60%, 0.10% and 3.40% respectively. Wednesday then features the Average Earnings Index, the Claimant Count Change and the Unemployment Rate that are expected out at 2.40%, last 25.5K and 4.70% in that order. Thursday concludes the week’s highlights with Retail Sales for which a 1.20% result is anticipated.

USD: The economic calendar for the United States cools down a bit this coming week. Starting on Monday, releases include the Empire State Manufacturing Index that is expected to print at 7.2, while Tuesday’s key events include Building Permits Housing Starts the Capacity Utilization Rate Industrial Production that are respectively due out at 1.27M, 1.26M, 76.30% and 0.40%, as well as Mortgage Delinquencies for which the last result was 4.80%. Wednesday then has Crude Oil Inventories out that last printed at -5.2M, while Thursday concludes the week’s highlights with Weekly Initial Jobless Claims and the Philly Fed Manufacturing Index for which results of 240K and 19.9 are expected.

EUR: The Eurozone’s economic calendar cools down considerably this coming week. Tuesday features EZ Flash GDP and the German ZEW Economic Sentiment survey that are due out at 0.50% and 22.3, while Final CPI is expected to come out at 1.90% on Wednesday. ECB President Draghi will give a talk on Thursday to conclude the week’s highlights.

Sterling Technical Forecast, Spot Rates and Major Chart Points:

GBP/USD weekly forecast: lower
Resistance: 1.2902/83, 1.3057, and 1.3120.
Spot Rate: 1.2898
Support:  1.2829/64, 1.2774 and 1.2672/1.2727.

EUR/GBP weekly forecast: higher
Resistance: 0.8485/0.8529, 0.8579/0.8663 and 0.8734/86.
Spot Rate: 0.8472
Support:  0.8402/0.8449, 0.8299/0.8330 and 0.8248.