• Queen’s speech to confirm PM Cameron’s intention of holding an EU referendum
  • Greek uncertainty to linger pending key events after the coming week
  • Weakness in UK and US Q1 GDP to be reassessed

European event risk remains at large. Uncertainty around the release of Greek bailout funds remains elevated despite ongoing discussions between Merkel, Hollande and Tsipras at this week’s EU Summit in Riga. However, with the emphasis still on delivering a complete set of measures to resolve the impasse in negotiations, discussions are set to continue over the coming week, with the possibility of an extraordinary Eurogroup meeting at some point. With Greece’s finances still in a precarious state, comments from Greek officials have suggested that failure to reach an agreement would mean that the 5th June payment to the IMF is unlikely to be met. That would raise the risk of Greek becoming the first country to default on an IMF payment. 

Queen’s speech to reiterate Cameron’s commitment to EU referendum. While comments from French President Hollande noted that the EU Summit in Riga was not the appropriate place or time to discuss the UK’s membership, the anticipation of an EU referendum remains a key source of uncertainty to the UK outlook. While the surprisingly definitive outcome to the election has removed a large element of political uncertainty, the absence of a coalition partner as an offset to the Conservative’s ambition, presents the UK with a key challenge in the shape of its ties with the EU. The Queen’s speech on Wednesday is expected to confirm PM Cameron’s intention of holding a referendum by end-2017, although any firming in the timing of this is likely to remain elusive at this stage.

UK GDP to be nudged modestly higher while surveys to point towards a firmer outlook. The flow of economic data over the coming week is unlikely to materially alter the current perceptions of the UK economy. The preliminary estimate of Q1 GDP underwhelmed expectations printing at 0.3% q/q. We expect the second estimate (Thurs.) to be revised up to 0.4%, although this would still be below the level of activity implied by the much firmer tone of Q1 business surveys. The expenditure breakdown will be examined to see if household spending continues to provide the lion’s share of propulsion as suggested by the recent strength of retail sales. To the extent that the weakness in Q1 GDP growth could reflect a reduction in inventories, officially measured growth should better reflect the trend implied by surveys in Q2. On Friday, the Lloyds Business Confidence Barometer and GfK Consumer Confidence for April, will provide additional insight into prospects for Q2. 

US Q1 GDP to be revised lower. As in the UK, scepticism over the reported weakness in Q1 activity has been widespread in the US following the weaker-than-expected preliminary GDP print last month. The extent to which this slowdown reflected statistical quirks related to seasonal adjustments rather than a genuine slowdown in underlying activity remains a key point of debate. While this uncertainty has received a lot of attention, the flow of data since the first estimate, in particular a large March trade deficit, points to the likelihood of a further downgrade. The second estimate of growth on Friday is expected to be revised down into negative territory. Over the rest of week, data releases including durable goods orders for April and consumer confidence for May, both on Tuesday, should help shed further light on the prospects for a Q2 rebound. Given the dollar’s sharp appreciation in recent months, domestic demand is likely to mostly shoulder the burden of growth, implying particular interest in the fundamentals driving consumer activity. New home sales data (Tues.) will provide a further update on the strength of the rebound in that sector.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

GBP/USD extends recovery gains to near 1.3250, as BoE looms

GBP/USD extends recovery gains to near 1.3250, as BoE looms

GBP/USD extends the recovery to near 1.3200 in European trading on Thursday, having found buyers near 1.3150. A fresh US Dollar pullback and a rebound in risk sentiment offer support to the pair ahead of the BoE policy announcements. 

GBP/USD News
EUR/USD advances to 1.1150, focus shifts to ECB-speak

EUR/USD advances to 1.1150, focus shifts to ECB-speak

EUR/USD is well-bid near 1.1150 in the European session on Thursday. The pair is underpinned by the renewed US Dollar retreat and an upbeat mood. Traders digest the Fed's dovish outlook, bracing for ECB-speak for fresh trading incentives. US data are also eyed. 

EUR/USD News
Gold price jumps back closer to all-time peak, $2,600 remains in sight amid fresh USD weakness

Gold price jumps back closer to all-time peak, $2,600 remains in sight amid fresh USD weakness

Gold price regains positive traction following the previous day's pullback from the all-time peak and builds on its steady intraday ascent heading into the European session on Thursday. 

Gold News
BoE expected to keep interest rate unchanged at 5% as price pressures persist

BoE expected to keep interest rate unchanged at 5% as price pressures persist

After a close call in August, the Bank of England’s September interest rate decision is keenly awaited for fresh cues on the bank’s future policy action and the pace of its bond sales.

Read more
Bitcoin surges to $62,000 mark after 50 bps Fed rate cut

Bitcoin surges to $62,000 mark after 50 bps Fed rate cut

Bitcoin and Ripple eye for a rally as they break and find support around their resistance barrier. Meanwhile, Ethereum demonstrates signs of recovery as it approaches a critical resistance level, indicating that an upward rally could be on the horizon if it successfully breaks through.

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures