DailyFX European Market Wrap: Potential Volatile Week Coming Up for Sterling and Euro
A potentially volatile week coming up for Sterling and the Euro with the latest European Central Bank meeting on Thursday and the UK General elections on
Thursday into Friday. Along with these high risk events there is raft of UK and European data, including services and composite PMIs for both currencies, Euro-Zone GDP and the German trade surplus, a popular subject with US President Donald Trump.
GBP is likely to remain in the grips of the UK opinion polls ahead of Thursday’s election. With the gap between the two main parties narrowing - and with the latest YouGov poll suggesting the possibility of a hung parliament – UK PM Theresa May’s calling of a General election to strengthen her hand in Brexit negotiations is looking more and more like an unnecessary gamble. GBPUSD currently remains capped under 1.3050 but a strong showing for the PM may see cable testing the 1.3200 – 1.3450 range. A hung parliament or a coalition ex-Tories could see GBP plummet with multi-decade lows against the USD beckoning below 1.2000.
In Europe, the ECB is expected to leave monetary policy unchanged but traders should carefully parse the accompanying statement to see if the Governing Council has upgraded its economic assessment. Any removal of dovish commentary will give an already strong single currency another leg higher, although lowly inflation in the zone – currently 1.4% - will keep changes to a minimum. At the end of the week the German trade figures will be released and another record surplus will likely fire up the wrath of US President Donald Trump once more.
Finally oil has another bad week with both Brent and US Crude losing 7%+ and hitting three-week lows, despite last week’s OPEC production-cuts extension. With US Shale producers increasing pumping more oil than ever, and with the US leaving the Paris climate accord, prices have the potential to fall further.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.