Depressing Pound as Fed meets
GBPUSD is trading with a negative sentiment falling to a five-month low over growing fear of the prospect of a hard Brexit. The UK waits for its new PM to lead them out of the EU which is looking likely to be Boris Johnson.
The market seems to be pricing in a scenario of no-deal exit on October 31st however, investors will keep an eye on the Bank of England (BoE), which is due to announce a no-change decision on interest rates tomorrow.
The greenback is trading broadly higher as the Federal Reserve (Fed) gets set to begin its two-day meeting. The Fed is widely expected to deliver another “patient hold”, however, the market will be closely watching for the updated economic projections and looking for signs of future rates heading lower by the end of this year.
FOMC members are hoping that the ongoing trade frictions between the US and several of its partners are contained, allowing for sustainable growth, without any prop from the central bank.
The economic calendar is relatively thin today, and we expect the currency market to trade within recent familiar ranges ahead of the Fed announcement.
Negative economic sentiment from the Eurozone hurt the shared currency yesterday. EUR/USD was down 0.25% on the day after the ZEW Indicator for Economic Sentiment for Germany declined to minus 21.1 points.
Global trade tensions, geopolitical risks and fear of a hard Brexit scenario are sharpening the appetite for Euro bears. European Central Bank (ECB) Chief Draghi issued fresh signals saying the central bank can turn to more stimulus tools to support the regional bloc.
Data to watch:
06:00 EUR Producer Price Index (MoM) (May) (Germany)
08:30 GBP Retail Price Index (MoM) (May)
08:30 GBP Retail Price Index (YoY) (May)
08:30 GBP PPI Core Output (YoY) n.s.a (May)
08:30 GBP Producer Price Index – Input (YoY) n.s.a (May)
08:30 GBP Consumer Price Index (MoM) (May)
08:30 GBP Consumer Price Index (YoY) (May)
08:30 GBP Core Consumer Price Index (YoY) (May)
08:30 EUR Jean Claude Juncker speech
09:00 EUR ECB’s Lautenschlager speech
12:30 EUR ECB’s Coeure speech
12:30 CAD BoC Consumer Price Index Core (MoM) (May)
12:30 CAD BoC Consumer Price Index Core (YoY) (May)
12:30 CAD Consumer Price Index – Core (MoM) (May)
12:30 CAD Consumer Price Index (YoY) (May)
12:30 CAD Consumer Price Index (MoM) (May)
13:00 CHF SNB Quartley Bulletin (Q2)
14:00 EUR ECB’s President Draghi speech
18:00 USD FOMC Economic Projections
18:00 USD Fed’s Monetary Policy Statement
18:00 USD Fed Interest Rate Decision
18:30 USD FOMC Press Conference
22:45 NZD Gross Domestic Product (QoQ) (Q1)
22:45 NZD Gross Domestic Product (YoY) (Q1)
23:50 JPY Foreign Bond Investment (Jun 14)
23:50 JPY Foreign Investment in Japan Stocks (Jun 14)