This afternoon’s focus will be on a series of key US economic indicators, starting with the Core PCE Price Index and Personal Consumption Expenditure (PCE) – the Federal Reserve’s preferred measures of inflation. Forecasts suggest a marginal month-on-month increase of just 0.1% for both indices from April to May. Should the data print in line or exceed expectations, it may raise concerns over the strength and direction of the US economy.
Also on the docket are Personal Income and Personal Spending figures. Expectations point to a slowdown in income growth, from 0.5% to 0.3% month-on-month. While personal income encompasses wages, dividends, and capital gains, recent stock market volatility is likely to be a key driver behind any downside surprises.
Personal Spending is also expected to decline, reflecting growing consumer caution amid economic uncertainty. This would align with yesterday’s figures showing a slowdown in GDP growth and an uptick in jobless claims – further signs of strain within the US economy.
Interestingly, recent US data hasn’t only impacted the dollar. The GBP, often considered a “beta currency” due to its sensitivity to global performances, also felt the pressure. We saw this play out yesterday afternoon as GBP/EUR dropped nearly 0.7% following underwhelming US releases, highlighting how broader risk sentiment can influence sterling beyond domestic fundamentals.
GBP/EUR 1.1881 GBP/USD 1.3457 GBP/AED 4.9449
GBP/AUD 2.0983 GBP/CHF 1.1086 GBP/CAD 1.8601
GBP/NZD 2.2619 EUR/USD 1.1316 GBP/ZAR 24.0773