Last week saw the BoE keep interest rates on hold at what has been an historic low of 0.5%, while they also kept the asset purchase facility at £375billion. Manufacturing was seen to come in fractionally stronger at 0.4%, as opposed to 0.3% predicted. We then also saw the Bank of England downgrade the growth forecasts for the UK 2.5% from 2.9%. We’ll see inflation data tomorrow which should take over from the recent election wake that has helped stabilise the pound. There is the big worry now, however, that GBP has been artificially inflated by the election results and that when the dust has finally settled we could see Sterling dip with inflation rate on‐goings.
For Europe last week, we saw preliminary German GDP data come in at 0.5%, below the 0.5% predicted. French GDP was more positive though, coming in higher than expected (0.6% from 0.0% and 0.7% from 0.2% respectively), and struggling Greece was seen to make good on its obligation to repay €754million to the International Monetary Fund. Greece, as it has been for some time now, will remain one of the main influences of euro strength/volatility – it all very much depends on whether they have enough in the kitty to pay off their debts on time. With their bailout programme coming to an end on June, we are fast approaching crunch time. Aside from Greece, we have German ZEW sentiment out tomorrow along with economic sentiment, and Thursday brings with it a number of manufacturing and services PMI data from several member states.
Across the pond, employment seems to be something of an ongoing issue as JOLTS job openings data was the worst since January (showing 4.99million as opposed to 5.16 million predicted), and retail sales – which are a vital indicator of economic health – came in at 0% from 0.3% expected. With building permits figures out tomorrow, USD could see some more solid direction in the mix given its importance to the construction industry. There will also be some more unemployment data out on Thursday, while Friday offers inflation data.
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