GBP Weekly Forecast 11th June - 15th June.

Good morning everyone,

 

Is this the most important week for the world economy?

That’s what Bank of America Corp. strategists asked clients in a report ahead of five days of presidential standoffs, trade tensions and central bank meetings. Each carries the potential to propel financial markets and shape the outlook for global growth after signs it slowed in the first quarter. 

So here’s what to watch for Monday - Wednesday 

Today, we've already seen a big drop in UK manufacturing & Industrial production for the month of April and UK trade balance data showed a much bigger drop than analysts forecasts, leaving Sterling weaker before the more important GDP estimate released at 11:00am for the month of May. Analysts are forecasting a rise of 0.2% from April's reading of 0.1%. (GBP will need to see a positive figure or could see GBP exchange rates hit levels not seen in over 2 months)

On Tuesday, U.K. Prime Minister Theresa May’s flagship Brexit legislation returns to the lower House of Commons after receiving a battering in the upper House of Lords, where it was amended 15 times. Ministers will be trying to overturn most of those defeats, with a combination of compromises and attempts to win rebel pro-EU lawmakers round. In two days of debating and votes on Tuesday and Wednesday, the key questions are about what kind of vote Parliament gets on the final Brexit deal, and whether Britain should be trying to stay in a customs union. (Set backs or more amendments could weaken GBP but progress should see GBP strengthen). 

On Wednesday, The U.S. Federal Reserve is set to hike its benchmark interest rate for a second time this year. Chairman Jerome Powell holds a press conference, and he and his colleagues will also publish new projections which could show them tilting toward four increases this year as a whole, rather than the three they hinted at in March. Also, In the U.K., inflation data will help the Bank of England determine whether to raise interest rates. (The USD will benefit from the rate interest rate increase once announced and another high reading of UK Inflation will increase the likelihood of a August BoE Interest Rate increase).

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