GBP
The pound had a dismal week last week, falling to new 2-year lows against the dollar, as headwinds facing sterling multiply- slowing economic growth, including a contraction in March; rapidly rising inflation; political uncertainty in Northern Ireland; and increasingly dovish comments from the Bank of England.
There looks to be little sign of relief on the horizon given the above combination, coupled with risk appetite remaining soft, posing an additional headwind to the risk-sensitive GBP.
This week’s calendar, meanwhile, is a busy one, including four MPC members testifying to MPs on Monday, followed by the latest jobs, inflation, and retail sales reports as the week progresses.
EUR
The EUR also remains under pressure, despite the ECB sounding increasingly hawkish, and the likelihood of the deposit rate rising north of 0 this year growing by the day.
Nevertheless, the bloc’s exposure to the macroeconomic impacts of war in Ukraine, coupled with broad-based haven demand for the USD, have left the common currency languishing at close to its weakest levels in 2 decades, with parity on the cards.
This week’s schedule, besides Thursday’s ECB minutes, is quiet, leaving the common currency to be driven by external factors once more.
USD
The dollar rallied to new 20-year highs against a basket of peers last week, continuing to benefit from elevated haven demand as Wall St slumped to its sixth straight weekly decline.
Continued hawkish rhetoric from the FOMC also supports the USD, with further 50bps hikes in both June and July now looking certain, and further such aggressive action increasingly likely in the autumn should data on inflation remain poor.
This week, there are two highlights: the latest retail sales report, and Tuesday evening’s remarks from Fed Chair Powell.
Data Releases
| Date | Region | Release | Previous | Consensus |
| Monday 16th May | UK | Monetary Policy Report Hearings | ||
| Tuesday 17th May | US | Retail Sales m/m | 0.50% | 1.10% |
| Wednesday 18th May | UK | CPI y/y | 7.00% | 9.10% |
| Wednesday 18th May | CAD | CPI m/m | 1.40% | |
| Thursday 19th Mat | AU | Unemployment Rate | 4.00% | 3.90% |
| Friday 20th May | UK | Retail Sales m/m | -1.4% | 0.2% |
World News
Germany plans to stop importing Russian oil by the end of the year, even if the EU fail to agree on a EU-wide ban in the next round of sanctions. Talks over deals with alternative suppliers are going well, as Germany believe they can solve the logistical headache. EU foreign ministers are set to meet today to discuss the next round of sanctions, with Hungary already rejecting an outright ban.
The EU are worried over renewed energy price spikes, surging food costs and social and economic dangers as the war in Ukraine continues to have no end date. The public may start to swing their votes to other political parties as the cost of living continues to increase and talks of how energy rationing could work.
| Share Index | Prev. Close | Open |
| FTSE100 | 7418.15 | 7418.15 |
| DAX | 14027.93 | 13961.86 |
| CAC40 | 6362.68 | 6315.68 |