UK: Weekly FX Market Update 26 May

GBP

• Will the Iran war come to a diplomatic end and help GBPUSD move higher, or see re-escalation and push it back to recent lows?

• With the Makerfield by-election three weeks away, on June 18th, is Sterling waiting for Burnham to become an MP before giving its verdict on a possible new Prime Minister?

• Bank of England MPC members Breeden and Dhingra both provided dovish views on UK rate hikes last week. Could UBS be correct, and could we see the chances of Bank of England rate hikes fade by September?

EUR

• Eurozone PMI data disappointed again last month, with both Services and Manufacturing PMI indicating contraction in the Eurozone economy to come.

• ECB Board member Rehn sounded hawkish last week, saying that it may be best to hike rates for the ‘sake of the ECB’s credibility’.

• Will a strong US GDP weigh on EURUSD and push it closer to 1.1000?

USD

• Are peace negotiations with Iran really in the ‘final stages’ or will the US re-escalate to de-escalate and physically seize the Traits of Hormuz?

• US yields and interest rates are pushing higher. Can this continue to support the US Dollar across the board?

• US GDP is released on Thursday. Will the US economy again outperform the UK and EU?

Mon May 25

All Day UK Bank Holiday

Tue May 26

15:00 USD Consumer Confidence

Wed May 27

02:30 AUD CPI

13:15 USD ADP Employment Change

Thu May 28

13:30 USD Prelim GDP/Core PCE/Unemployment Claims/Durable Goods

15:00 USD New Home Sales

Fri May 29

00:30 JPY Tokyo Core CPI

07:00 EUR German Prelim CPI

13:30 CAD GDP