GBP - British Pound
Last night Boris Johnson announced that the UK will be postponing its June 21st 'Freedom Day' to July 19th. This was to be the last stage in the unlocking of lockdown, with everything opening up. Sterling didn't react to the news, suggesting that the fall we saw in the pound last week had already priced in the news delivered yesterday evening.
Sterling has in fact shown some resilience this morning, which was helped on its way by positive signs in the labour market. UK unemployment fell to 4.7% as payrolls surged, rising by 197,000 in May to 28.5 million. Vacancies are also on the rise as firms look to hire, while average earnings rose year on year by 5.6%.
There are clearly green shoots forming in the UK economy, but the market will closely monitor how this four week delay could impact the economy, particularly the hospitality sector. Many pubs and restaurants are teetering on collapse, and this could push them over the edge, and with it, youth unemployment could be at crisis levels.
All eyes are firmly fixed on tomorrow's Federal Reserve monetary policy announcement in the US. With surging inflation, markets are starting to wonder if the Federal Reserve will be forced to consider tapering its asset purchase programme.
US Treasury yields are on the rise, while the Dow Jones Industrial Average has dropped - all pointing to signs that the Federal Reserve may start discussing tightening of monetary policy tomorrow.
The US dollar could be the beneficiary of this rhetoric, and is very much on the front foot versus the euro and the pound already. Today's US retail sales posting could support the dollar further, as a strong posting here could add fuel to the calls for the Fed to act tomorrow. However, economists are expecting retail sales to fall to -0.8% in May after stagnating in April, which may have a counter effect on the US dollar.
The Euro remains a quiet bystander at the minute, with Eurozone industrial production the only posting of note. Industrial output jumped to 0.8% month on month, with an expected figure of 0.4%. This gave the euro some momentum, but the currency could mainly take its cues this week from the US Dollar.
1.4060 - 1.4135 ▼GBP/EUR:
1.1565 - 1.1625 ▼EUR/USD:
1.2100 - 1.2190 ▼GBP/AUD:
1.8130 - 1.8485 ▲