- Major central banks are estimated to hold interest rates this week, with the Bank of England almost likely to keep interest rates unchanged ahead of the UK election in July (Thu.). UK Inflation is also due a day before the central bank meeting (Wed.), where the headline CPI survey points for the print to hit the 2% goal for the first time in nearly three years. UK Flash PMI Survey for June (Fri.) will be key to understand how growth is developing in the country, given the country’s recent signs of cooling in activity.
- In the euro-area a second reading of inflation will provide further insight into last month’s larger than expected advance (Tue.) and euro-area flash PMI will also be due toward the end of the week (Fri.).
- In the US, last week’s FOMC meeting saw a shift in the dot plot to only one rate cut by the end of this year even as US May Core CPI and PPI showed signs of cooling, coming in below estimates. This week, Retail Sales data (Tue.) are estimated to show a gain from the previous month to 0.3% with businesses slashing prices to attract costumers but consumer remain under pressure.
- The US Dollar continues to be on the spotlight, holding near a 7-month high as political tensions in France spurred worry across the financial markets, especially with debt risk for the country depending on the election outcome. France’s far right party is now on track to win 35% of the vote in the first round at the end of this month. The US Dollar Index holds at 105.60, set to test 106.
- The euro is unchanged, continuing to hover the 1.07 support after trading as low as 1.0668 on Friday and dropping almost 1% last week. Next key support seen at 1.06 and resistance at 1.08.
- Sterling trades near its lowest level since the beginning of May, fragile around 1.2700. The pair traded as low as 1.2657 on Friday. Next key support seen at 1.2650 and resistance at 1.28.
- EURGBP is trading near 0.8450 after testing the key support at 0.84 on Friday. It will be a key week for the pair with major events on both regions and scaling political tensions.