Last week the market was focused on the likelihood and timing of an interest rate hike from both the UK and the US. From a UK perspective, the focus was on rhetoric following comments suggesting Bank of England officials are signposting for Q2 of next year. In the US, the focus was very much on economic data and whether this could support the case for hiking rates next year.

Bank of England Deputy Governor Ramsden leaned towards raising inflation (a key metric considered when changing monetary policy). Ramsden stated that there was a risk that demand would get ahead of supply in the short term which could push prices higher. In addition, there was further speculation that underlying strength in the housing market would lead to a more aggressive Bank of England monetary policy within the next few months.

The key data focus in the US was on the Nonfarm Payrolls. There was added focus on this following the disappointing miss from the previous month. Nonfarm payrolls increased by 559,000 jobs last month, which was helped by higher COVID-19 vaccination rates, while the unemployment rate fell from 6.1% to 5.8% in April. However, the headline figure was circa 100,000 below expectations and the US Dollar weakened as a result. The softer-than-expected report suggests there is no urgency for the Federal Reserve to begin tapering its monthly purchase of $120 billion in bonds to support the economy.

Looking to the week ahead, important data has emerged from both sides of the pond. In the UK GDP for April is due whilst in the US, we are set for another reading on inflation. Meanwhile, the ECB will review monetary policy in the first of several important monetary updates from major central banks over the next few weeks. The market will keep a close eye on COVID-19 developments. The past week has seen a further rise in cases in several countries, not least the UK where they are up almost 40%.


  • UK House Price Index
  • German Factory Orders

It is a quiet start to the week. The UK house price index will be watched closely for further traces of inflationary pressures on the economy. A larger than expected outcome could further strengthen the argument for a rate hike next year. In the meantime, the German factory orders will be closely monitored for further signs that the economy is recovering.


  • German Industrial Production
  • Eurozone GDP
  • US JOLTS Job Opening

The German ZEW and Eurozone GDP will be closely monitored for clues on future growth prospects. The German ZEW will be monitored for clues on future sentiment given the increased vaccination rates. Following the disappointing US jobs data, the job openings will be closely watched in the form of JOLTS Job openings.


  • German Trade Balance
  • US 10 Year Bond Auction

The US 10 Year bond auction will be the focus today with interest rates being a key driver of FX rates at the moment. This will highlight the desire of the market and where they believe interest rates could be moving forward.


  • ECB Monetary Policy Meeting
  • US Consumer Price Index
  • US Jobless Claims

The ECB meeting takes place amidst a mixed economic backdrop. Eurozone GDP fell in Q1 for the second quarter in a row. However, timelier indicators point to a rebound in Q2 which seems to be gathering momentum throughout the quarter. In addition, CPI inflation moved up to 2% in May consistent with the ECB’s target for the first time since late 2018. Monetary policy will be left largely unchanged for now. The focus will be on the tone and comments from the ECB President Lagarde. Following the disappointing outcome from the US nonfarms payroll, the US weekly jobless claims will continue to be watched closely. In addition, the US consumer price index will provide another read on inflation. The annual headline rate rose by much more than expected in April, to 4.2% its highest since 2008 led by energy prices.


  • UK Monthly GDP
  • UK Industrial and Manufacturing Production
  • US UoM Consumer Confidence

It is expected that UK GDP for April will demonstrate a positive impact of the easing of restrictions with a third successive monthly pickup. In addition, data for industrial and manufacturing production for the UK are due for release. The US UoM consumer confidence is also set for release.

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