There’s been some small upside seen in the pound this morning, at the beginning of what could be a pivotal week for sterling. The FTSE is little changed, seeing a little selling and pulling back from last week’s highs.
Economic data in focus for BoE
While it would be remiss to focus solely on the upcoming economic data from the UK over the ongoing political situation, it does appear likely that the scheduled releases will be the main driver for the pound in the coming days.
Tomorrow’s employment figures, and in particular the wage component, could provide further support for the pound but it is Wednesday’s inflation release that looks probable to be the main event.
The CPI in year-on-year terms for June is expected to tick back higher to 2.6% and a reading of this or higher would see expectations for an August rate hike from the BoE rise further. After peaking above 3% at the back-end of 2017, this inflation metric has been drifting lower so far this year with 3 of the last 4 releases coming in below forecast but a reading inline or above the 2.6% expected would further support a hike.
UK consumer spending picks up
2018 has been a challenging year for retailers, but according to the latest data from Visa there has been an improvement of late with good weather and the World Cup contributing to the first back-to-back increase in household spending in over a year. Due to transactions through Visa accounting for £1 in every £3 spent in the UK the data serves as a fairly good proxy and suggests that the latest retail sales figures due out on Thursday could be susceptible to an upside surprise.
Given the success of the recent world cup, which included England’s unexpected run as Gareth Southgate guided the nation to our joint best ever finish in an overseas tournament it is unsurprising that hotels, restaurants and bars are among the areas with the best results - with thousands of pints no doubt flung into the air in celebration before being hastily reordered!
Deutsche Bank (DE:DBKGn) jumps on earnings beat
There’s been a notable move higher in shares of Deutsche Bank this morning, after the firm unexpectedly announced its second quarter results ahead of schedule. The firm wasn’t expected to deliver its latest trading update until next week, but the company opted for an early release which has no doubt come as a welcome tonic for its long suffering shareholders. T\
he publication contained several positives with both the top and bottom line coming in well above consensus forecasts. Q2 pre-tax profit of €700M and €400M in net income were more than double the €321M and €159M respectively that was expected and the announcement has seen the stock jump as much as 9% in Frankfurt.