Market Update

Pound Sterling exchange rates have had a very good month in May, considering news of a UK election coming in July, the volatility has very much been swayed in favour of Sterling, which has given us a positive start to June. June will be an interesting month with plenty of data releases to keep us busy- we also have interest rate decisions from the UK, U.S and Europe, with Europes cut already priced in, if we see a cut from either the BoE or the Fed, this will definitely add more volatility into the market.
This week we have a few releases of note- on Monday we have manufacturing PMI data from Europe, the UK and the U.S- with all 3 expected in stronger than previous, but it is worth noting that only the UK’s PMI data is expected out above 50- which will be net positive for Sterling exchange rates. On Tuesday the only noteworthy release is Germany unemployment data which is expected on par with last month at 5.9%- which shows no material change in the jobs market for Germany- this should have no effect on the Euro.

On Wednesday we have Services PMI data from Europe, the UK and the U.S- Europe’s is expected on par, the UK’s is expected weaker, and the U.S PMI data is expected stronger, so this should be a positive release if you are trading the U.S Dollar. The Bank of Canada also have their interest rate decision on Wednesday where they are expected to cut interest rates by 25bps. On Thursday we have the ECB’s interest rate decision where we are expected rates to be cut by 25 bps- now as this is priced in I am unsure whether this will weaken the Euro much, but if there is more forward guidance surrounding more rate cuts then I would expect to see the Euro weaken through the afternoon.

Finally, on Friday we have U.S Non farm payrolls which are expected as a higher print at 180k- as always, this is a highly unpredictable and volatile release- so exercise caution if you are trading USD on Friday, and if need be, contact us to utilise market order strategies if it Is required.

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