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GBP/USD Weekly Forecast - 28 May - 1 June

Saturday, May 26 2018
GBP/USD Weekly Forecast - 28 May - 1 June

Not all UK figures missed expectations. While inflation dropped to 2.4% y/y, retail sales leaped by 1.6%, providing promises of a Spring comeback. Q1 GDP growth remained unchanged at 0.1% q/q. Yet GBP/USD also depends on the US Dollar, which enjoyed safe haven flows. The Japanese yen was the big winner but also the USD took advantage of fears related to global trade and the cancellation of the Kim-Trump Summit. Moreover, the Fed confirmed the rate hike in June.

Manufacturing PMI stands out as the page turns into June, an important month for Brexit negotiations.

Major events in the coming week:

  1. BRC Shop Price Index: Tuesday, 23:01. The British Retail Consortium’s measure of inflation, using its own stores, stood at -1% in April. A similar figure is likely now.
  2. GfK Consumer Confidence: Wednesday, 23:01. Consumer confidence deteriorated in April with a score of -9. A small improvement to -8 expected. The negative number represents pessimism.
  3. Net Lending to Individuals: Thursday, 8:30. Growth in lending implies growth in the economy even if debt is created. A net level of 4.2 billion pounds was seen in March and April carries expectations for a rise to 5.2 billion.
  4. M4 Money Supply: Thursday, 8:30. The amount of money in circulation dropped by 1.4% m/m in March, a worrying sign and worse than expected, indicating a squeeze. The figure for April is projected to show a more moderate drop of 1.1%.
  5. Mortgage Approvals: Thursday, 8:30. The official mortgage consents figure dropped to 63K in March and is expected to maintain the same level in April.
  6. Manufacturing PMI: Friday, 8:30. Markit’s forward-looking index for the manufacturing dropped to 53.9 points, reflecting more modest growth. Expectations for another slide to 53.5 points.

(All times are GMT)

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