The pound is straining to generate momentum to begin the week after a pair of disappointing economic releases raised the stakes for the Bank of England’s next meeting. Sterling weakened by half a cent against US dollar across last week and traded sidewards against the euro.
The week ahead could well be dominated by more discussion of central bank policy. With consumer sentiment rising to a five-month high in the United States, markets are pricing in fewer cuts from the Federal Reserve this year, piling even more pressure on sterling in what is proving to be a tricky July.
When the European Central Bank’s (ECB) senior members gather on Thursday, a pause in the rate-cutting agenda seems to be very much on the cards. With the decision all but a sure thing, the more pertinent question might whether this week’s decision will be a sign of a larger trend or merely mark an interval before another snip in September.
In other news, asking prices for UK properties fell by 1.2% between June and July. According to Rightmove, this was the steepest summer fall in the over 20 years it has tracked this data and was driven by a 2.1% fall in asking prices in inner London.
It is a back-heavy week when it comes to economic events. The highlight of the first three days of this week is probably Jerome Powell’s speech on Tuesday. Donald Trump, who last week hinted he may defenestrate Powell, will surely be tuning in, social media at the ready.
Thursday brings the highly significant UK S&P Global services and manufacturing study for July. Germany will also see manufacturing numbers that same day, before the ECB takes centre stage with its lunchtime press conference.
Economists are predicting a big jump when it comes to Friday’s UK retail sales report. The June heatwave is thought to have pushed droves of punters into pubs, restaurants and other outdoor recreational venues.
The euro will of course be impacted by any progress in trade negotiations with the United States. Aside from that rather tiresome to and from, the Ifo business climate and US durable goods orders could move the dial on Friday.
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