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Pound weakened by GDP contraction

Pound weakened by GDP contraction

Economic Calendar

  • 13/06/2022: UK – GDP YOY
  • 14/06/2022: EUR – Germany Inflation Rate
  • 14/06/2022: EUR – ZEW Economic Sentiment
  • 14/06/2022: UK – Unemployment Rate
  • 14/06/2022: US – PPI MOM
  • 15/06/2022: US – Fed Retails Sales MOM
  • 15/06/2022: US – Fed Interest Rate Decision
  • 16/06/2022: UK – BOE Interest Rate Decison
  • 17/06/2022: EUR – Coe Inflation Rate YOY

 

GBP has declined vs USD in the early European session this morning. Data from the UK showed that the GDP contracted by 0.3% on a monthly basis in April, missing the market expectation for an expansion of 0.2%. The currency cross now trades at its weakest level since mid-May.

This continues last week’s trend. Weaker UK data and a cautious outlook from the Bank of England has been compounded by a perceived progressive outlook from the European and US central banks respectively.

The US dollar’s bullish momentum has been reinforced by the release of the much stronger than expected Core US inflation data last Friday. This has reinforced expectations for an even more active Federal Reserve, with particular focus on the Fed Reserve’s interest rate decision on Wednesday.

Looking to the rest of the week coming up – we have a full economic calendar. The market will be looking for any indication on possible rate hikes, and future economic policy. In addition to the Fed Reserve interest rate decision, the Bank of England’s is on Thursday, and we also have important European inflation data out this week. GBP will remain under pressure if the BOE continues its reticence to act against inflation with the fear of slowing growth and Stagflation.

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