After being challenged by Labour leader Ed Miliband during Prime Minister’s Questions today, Prime Minister David Cameron was more than more than happy to rebuke Mr Miliband’s declaration that the UK economy was faltering by citing this morning’s positive UK jobs data. The UK Claimant Count Change for May fell by -8.6K, surpassing market expectations of a fall of just -5.0K, and UK Average Earnings also rose by 1.3%, one percentage point higher than was expected.
Immediately following the release cable spiked to 1.5678 before levelling out, whist GBP/EUR rose to a daily high of 1.1808 and held close to this level throughout the rest of the morning. GBP/EUR has since levelled off to 1.1790 and continues its long established sideways trade, remaining within the 1.16 to 1.19 range as it has done for the past four months. After reaching a daily high of 1.5682 and closing in on a four month high, GBP/USD has now dropped back to 1.5648.
Sterling is currently outperforming right across the board and has gained 6% in the past three months as recent UK data has suggested a recovery of the UK economy may well be underway. However, should this positive data not continue, combined with Mark Carney’s propensity to freely expand monetary stimulus as required, next month could herald a dramatic turnaround for sterling when Mr Carney begins his governorship at the Bank of England.
With very little data due out for the rest of today, trader’s attention will now turn to tomorrow. Following the bullish remarks made by ECB president Mario Draghi last week and French president Francois Hollande’s declaration at the weekend that “the crisis in Europe is over”, market participants will be focused on the ECB monthly report due to be released tomorrow in the hope that further indication or rhetoric may be given affirming such unqualified optimism. Consequently we could see substantial movement in EUR/USD following the release of this report, especially considering the fact that the pair is currently trading close to a four month high at 1.3295.
Please find a summary of this week’s economic calendar below:
00:50 Japanese Foreign Bond Investment
02:30 Australian Employment Change
02:30 Australian Unemployment Rate
09:00 ECB Monthly Report
13:30 US Initial Jobless Claims
13:30 US Retail Sales
15:00 US Business Inventories
00:50 Bank of Japan Policy Meeting Minutes
10:00 EU Consumer Price Index
13:30 US Producer Price Index
14:15 US Industrial Production
14:55 US Reuters/Michigan Consumer Sentiment Index