GBP
Sterling scored a second negative week in a row last week, as the market continues to look poorly on the UK economic outlook, and digested the news of PM Johnson’s resignation.
The subsequent Tory leadership contest will take up plenty of column inches, however the market impact is likely to be minimal, with none of the major candidates set to call a snap general election, and most representing policy continuity.
This week, May’s GDP figures are set to show a further loss of economic momentum, though sterling remains driven primarily by global risk appetite.
EUR
The common currency is rapidly approaching parity with the USD, having cracked below huge prior support around 1.0350.
There seems little likely to arrest the EUR’s slide at present, especially with a woeful winter awaiting, as the prospect of Russian gas supplies being cut off grows ever more realistic.
This week’s docket is relatively quiet, besides some important German business sentiment data, as the market continues to wait for clarity on the ECB’s much-anticipated spread/yield control tool.
USD
The dollar remained the ‘pick of the bunch’ last week, however the buck’s rally twice stalled just beneath the DXY’s 107 handle, possible showing that the bulls are running out of steam.
Friday’s US labour market report was largely ignored by the market, however the addition of another 372k jobs cements the case for another 75bps hike from the Fed later this month.
Looking ahead, a busy week awaits, including the latest inflation figures, set to show a further acceleration in CPI towards 9% YoY.
Data Releases
| Date | Region | Release | Previous | Consensus |
| Tuesday 12th July | EU | EU Economic Forecasts | ||
| Wednesday 13th July | UK | GDP m/m | -0.30% | 0.00% |
| Wednesday 13th July | US | CPI m/m | 1.00% | 1.10% |
| Wednesday 13th July | CAD | BOC Rate Decision | 1.50% | 2.00% |
| Friday 15th July | US | Retail Sales m/m | -0.30% | 0.90% |
World News
More than 10 Conservative MPs have now declared their intention to run for the leadership of the Conservative party, with the 1922 Committee set to meet tomorrow to draw up the rules for the leadership contest. More MPs are expecting to throw their name into the hat before the vote, as formal nominations open tomorrow, and voting begins from Wednesday. A shortlist of two will then be finalised before parliament goes into summer recess on the 21st of July, with the new Prime Minister expecting to be elected before 5th September.
French Finance Minister Bruno Le Maire has warned Europe must prepare for Russia to shut off it’s gas deliveries entirely, in retaliation for sanctions placed because of the Ukrainian war. The Finance Minister has asked the Bloc to build up stockpiles, reduce consumption and remove red tape slowing the development of renewable energies. The EU has been looking to other continents for further gas supplies such as Africa.
| Share Index | Prev. Close | Open |
| FTSE100 | 7196.24 | 7196.24 |
| DAX | 13015.23 | 12808.11 |
| CAC40 | 6033.13 | 5923.83 |