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PMI data also set to create market volatility this week..

GBP

As mentioned last week, the only way £-€ was going to see a 0.5% uplift was if UK wage data surprised on the upside. Both came to fruition and the pair is deemed once again favourable, halting a 2-week slide in the meantime. 

word of warning for Sterling sellers; current levels may be more favourable than they seem. In terms of the trading range and historical trend, GBP v EUR is a buy. However, depending on what happens Wednesday & Thursday, it could be a significant 'more to lose than to gain' scenario.

GBP v USD rose 1.3% last week and any jump this big should be considered under any circumstance..

Headline inflation in the UK is expected to fall pretty much to the BoE target of 2% (down from 3.1%) on Wednesday with the core inflation number dropping to 3.7% from 4.2%. If expectations are correct, it all but confirms the start of the UK interest rate cut cycle, set to begin next month. 

Lower interest rates are currency negative and GBP could fall 1% from the current position quite easily in the middle of the week. Any deviation from the consensus and GBP could see a small gain as the chances of a June rate cut would shrink (currency positive).

Thursday & Friday could compound further misery for the UK/£ if the PMI's and retail sales figures arrive as forecast.



EUR
The Euro-Zone published positive GDP numbers last time out (expected) and are scheduled to produce better PMI data than the UK this week. Such a result will increase the Euro's value versus the Pound, which may already be hurting from the previous days' inflation release. 



USD
The Dollar regained some recently lost ground versus the Euro last week, but gave away some significant ground against GBP. 1.3% is some loss and over half of that arrived after US PPI was released higher than anticipated. The short-term downtrend could continue up until the middle of the week.

Upcoming Data
Monday 20th May 2024
N/A 



Tuesday 21st May 2024
09:00 US - Treasury Secretary Yellen speech
10:00 EU - Euro-Zone balance of trade
18:00 UK - BoE Governor Bailey speech


Wednesday 22nd May 2024
07:00 EU - Euro-Zone new car registrations
07:00 UK - Inflation rate, core inflation rate & public sector borrowing
09:05 EU - ECB President Lagarde speech
10:30 EU - German 10-year bund auction
12:00 US - Mortgage applications
15:00 US - Existing home sales
19:00 US - FOMC minutes

Thursday 23rd May 2024
05:30 EU - Dutch consumer confidence
08:15 EU - French PMI
08:30 EU - German PMI
09:00 EU - Euro-Zone PMI
09:30 UK - PMI
12:30 UK - BoE Pill speech

13:30 US - Initial/continuing jobless claims
14:45 US - PMI
15:00 US - New home sales
15:00 EU - Euro-Zone consumer confidence




Friday 24th May 2024
00:00 UK - Consumer confidence 
07:00 EU - German GDP
07:00 UK - Retail sales

07:45 EU - French business confidence 
13:30 US - Durable goods