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Calm after the storm

Calm after the storm

After Friday’s better than expected US payroll report and in the absence of any major economic data releases yesterday, the foreign exchange markets look to have calmed.

Fears the pace of growth in China will ease in Q2 were raised after trade data revealed export weakness and faltering domestic demand. Ultimately this has global implications and will likely strengthen the USD as funds move to safety.

UK house prices rose in May at the fastest pace in three years. The RICS said that its seasonally adjusted house price balance for May came in at +5. This being the strongest reading since June 2010 supporting hopes that the recovery is gathering strength.

GBP/USD looks to have consolidated above 1.5550 ahead of this morning’s UK industrial and manufacturing production figures. These releases together with tomorrow’s labour market report will be important for GBP and give us more clarity on the pace of GDP growth in Q2.

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