British Pound is Vulnerable to Political Instability (Weekly Review)

Throughout the last trading week, the volatility in the foreign exchange market remained relatively low. The macroeconomic calendar was not rich in important events, except for the release of the Reserve Bank of Australia Meeting Minutes and the US Federal Open Market Committee Meeting Minutes, as well as the publication of the UK Consumer Inflation data, although these events had no significant effect on the dynamics of relevant currency pairs.

The tone of the RBA protocol as a whole was neutral, but the lack of “dovish” shades contributed to generating some demand for the Australian dollar. With the ongoing trade war between the United States and China, its growth is still used for sales, but profit-taking on long positions in the USD allowed the AUD to finish the week near the resistance of 0.6833. Despite this, the Aussie remains in a vulnerable position, and its attempts at growth can further be used for sales.

UK Inflation data and the FOMC protocol had virtually no effect on the dynamics of the GBP/USD. Along with rumors about possible resignation of Theresa May, the couple was under steady pressure from sellers, and as a result support for the 26th figure was tested. Although the elimination of dollar longs contributed to a rebound to 1.2747, the pound, in the face of political uncertainty, will also remain in a vulnerable position until good news can change the mood of investors.

Schedule for this week: 

Monday, May 27
08:40 GMT - Eurozone. European Central Bank Coeure Speaks;
USA – Memorial Day.

Tuesday, May 28
05:45 GMT - Switzerland. GDP;
06:00 GMT – Germany. Gfk Consumer Confidence;
09:00 GMT – United Kingdom. Inflation Report Hearings;
09:00 GMT - Eurozone. Business Climate;
14:00 GMT - USA. Consumer Confidence;
20:00 GMT – New Zealand. RBNZ Financial Stability Report.

Wednesday, May 29
00:00 GMT - Japan. BoJ Governor Kuroda Speaks;
01:00 GMT - New Zealand. Reserve Bank of New Zealand Governor Orr Speaks;
01:00 GMT - Australia. HIA New Home Sales (MoM) (Apr);
07:55 GMT - Germany. Unemployment Change (May) ;
07:55 GMT - Germany. Unemployment Rate;
14:00 GMT - Canada. Bank of Canada Interest Rate Decision;
14:00 GMT - Canada. Bank of Canada Rate Statement.

Thursday, May 30 
22:45 GMT - New Zealand. Building Consents;
23:50 GMT - Japan. Foreign Investments in Japanese Stocks;
01:30 GMT - Australia. Building Approvals;
12:30 GMT - USA. Personal Consumption Expenditure (PCE) Prices (QoQ) (Q1);
12:30 GMT - USA. Core Personal Consumption Expenditure (PCE) Prices;
12:30 GMT - USA. GDP (Q1);
12:30 GMT - USA. GDP Price Index;
14:00 GMT - USA. Pending Home Sales.

Friday, May 31
23:30 GMT - Japan. Unemployment Rate;
23:50 GMT - Japan. Industrial Production;
23:50 GMT - Japan. Tokyo Core Consumer Price Index (CPI), excluding fresh food;
23:50 GMT - Japan. Retail Sales;
01:00 GMT - PRC. Services Purchasing Managers Index (PMI);
01:00 GMT - PRC. NBS Manufacturing Purchasing Managers Index (PMI);
06:00 GMT - Germany. Retail Sales;
12:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
12:30 GMT - Canada. GDP;
12:30 GMT - Canada. GDP (QoQ) (Q1);
12:30 GMT - USA. Core Personal Consumption Expenditure (PCE) Price Index;
12:30 GMT - USA. Personal Income/Spending;
16:45 GMT - USA. Chicago PMI;
14:00 GMT - USA. Michigan Consumer Sentiment (May).

Author: Anthony Porter, IAFT Analyst