Daily currency report
Overview
The pound will be hoping to continue on the back of progress made when the Bank of England steps into the spotlight. Minutes from Mervyn King’s last MPC meeting will be published with many eager to discover if the MPC is any closer to committing to injecting further stimulus ahead of Mark Carney’s inauguration on July 1. Trade balance figures are due from Europe with key manufacturing and housing data due from the US. These figures are likely to be generally overlooked, however, with the primary focus on the FOMC meeting which concludes soon.
Sterling
Sterling remains in a good position against its major rivals after a week which favoured position-buying into the UK currency, following the release of some strong economic indicators. Unemployment figures and industrial output data reflected strong performance and an economy showing signs of recovery. The week ahead could throw a few surprises into the mix with the Bank of England set to publish the minutes from this month’s meeting and May’s retail sales figures due. The latter is expected to show a vast improvement to 0.6 per cent growth after the previous month showed a surprise fall of -1.3 per cent. Anything below the forecasted level could prove damaging for the pound’s recent progress.
US dollar
The dollar is hoping to claw back some of its recent losses after the Japanese yen became the favoured safe-haven currency, but this may only happen if the Federal Reserve commits to maintaining current monetary stimulus levels until at least the end of the year. Manufacturing data and housing figures are due for release. However, these releases may only have a short-term impact across markets with the Federal Reserve’s policy decision as the main focus.
Euro
Europe’s largest economy has showered signs of stuttering performance of late leaving investors caught into minds as to whether they should back the euro or not. Data is expected to show that sentiment has improved from last month which could encourage some position-taking in the euro beforehand. Following this, manufacturing and service PMIs will be released from Germany, France and the eurozone as a whole which could trigger some more volatility if forecasts are not met.