After a week marked by concerns surrounding the US-China dispute and uncertainty over the UK political landscape, investors are likely to continue monitoring developments on those fronts. With regards to central banks, the BoC decides on interest rates on Wednesday. The forecast is for policymakers to keep interest rates unchanged and thus, if this is the case, all the attention is likely to fall to the accompanying statement. As for the data, Germany’s preliminary inflation prints for May are due to be released, as well as the US core PCE index for April.
Monday is a quiet day, with no important economic releases on the agenda. Both the UK and the US markets will be closed due to the Spring Bank Holiday and the Memorial Day respectively.
We don’t get any top-tier UK data during the rest of the week either, but GBP-traders are likely to keep their gaze locked on the political landscape. Following UK PM Theresa May’s announcement on Friday that she will step down, several Tory members have shown interest in replacing her, with media suggesting that about a dozen are considering to take part in the race. All of them support that they could unite Parliament and build consensus, or even amend the existing Brexit accord, even though the EU has made it clear that it will not renegotiate. According to news reports, most of the contenders are pro-Brexit and prepared to leave the EU without a deal if needed. With Boris Johnson the clear favorite with bookmakers, the probability for a no-deal Brexit in the end of October remains decent in our view.
On Tuesday, during the European morning, Switzerland’s GDP for Q1 is due to be released and the forecast suggests that the economy accelerated to +0.3% qoq from +0.2%. Although this would be encouraging news for SNB policymakers, we don’t believe that they will be tempted to alter their policy stance when they meet in June. Swiss inflation stood at +0.7% in April, well...
Read the full financial markets weekly outlook on JFD Research.