GBP
Sterling notched a second straight weekly advance last week, benefitting from a softer USD, as the market continues to shrug off the stagflation being exhibited by the UK economy.
Despite the gains, the pound is set to remain under pressure from the dismal economic outlook, as well as the technical landscape with a failure to break resistance at 1.2635 suggesting that further downside may be in store.
This week, however, a quiet economic schedule awaits, especially with the UK closed for Bank Holidays on both Thursday and Friday.
EUR
The common currency also benefitted from a weaker USD last week, while also finding support as a result of continued hawkish ECB-speak confirming that negative rates will come to an end by September.
Both catalysts brought the EUR to 1-month highs, above the psychologically important 1.07 mark, as the currency continued to recover from the 6-year lows seen earlier this month.
Looking ahead, Tuesday’s ‘flash’ CPI data highlights this week’s calendar, set to show another record inflation rate ahead of the ECB’s aforementioned tightening plans.
USD
As mentioned, the USD softened for a second week running, confirming that a near-term top is now in for the dollar, despite the economy continuing to perform well, and the Fed remaining aggressive in their plans to tighten policy.
A rebound in risk assets also posed a headwind for the dollar, especially due to the resulting decline in Treasury yields, and small yield curve flattening.
Looking ahead, a relatively quiet week awaits, highlighted by Friday’s labour market data.
| Date | Region | Release | Previous | Consensus |
| Wednesday 1st June | AU | GDP (QoQ) | 3.4% | 0.6% |
| Wednesday 1st June | US | ISM Manufacturing PMI(May) | 55.4 | 54.5 |
| Thursday 2nd June | US | ADP Employment Change(May) | 247K | 280K |
| Friday 3rd June | EU | Retail Sales | 0.8% | 5.4% |
| Friday 3rd June | US | Non-Farm Payrolls | 428K | 310K |