As illustrated in my Crammer’s Guide to the Brexit Saga, the issue of whether or not the U.K. stays in the European Union has been dominating the pound’s price action. But with lots of top-tier economic reports on deck this week, Brexit-related headlines could take a step back from the spotlight.
Here are four other U.K. events you should watch out for this week:
Consumer Price Index
Tuesday, June 14 (9:30 am GMT)
0.4% uptick expected vs. 0.3% growth in April
Low inflation is one of the Bank of England’s (BOE) concerns, as low consumer prices is keeping businesses from stepping up their investments to the economy. April’s annualized consumer price index (CPI) came in at 0.3%, lower than March’s 0.5% growth and is the first slip since September 2015. Not surprisingly, GBP/USD turned around from its intraday high and set a bearish tone for the rest of the day.
The main reasons for the price declines in April were corrections from Easter holiday prices, lower air fare rates, and government-mandated cuts in social housing rents. Will this mean that the CPI will go back to its uptrend in May? Analysts are expecting CPI to rise by 0.4% Another downside surprise could hint at a trend reversal for the U.K.’s prices, which could then weigh on the pound.
Wednesday, June 15 (9:30 am GMT)
Unemployment rate expected to remain at 5.1%
Average earnings index (1.7% expected vs. 2.0% last month)
Claimant count change (-0.1K expected vs. -2.4K previous)
Since the service sector is the biggest contributor to the U.K.’s GDP, it makes sense that the BOE and the market players are watching the U.K.’s employment conditions closely. The unemployment rate remained at its lowest reading in 10 years while the claimant counts fell by 0.1K against expectations of a 14.7K increase. More importantly, the average wages further rose by 2.0% in April after growing by 1.9% in March.
This time around analysts are expecting the unemployment rate to stick to 5.1%, a 0.1K decline for claimant counts and a 1.7% uptick in average wages. Watch the wages more closely though, since the BOE is especially interested on the impact of wages on consumption, the other major driver of the U.K.’s economy.
Thursday, June 16 (9:30 am GMT)
0.3% uptick expected from April’s 1.3% growth
Consumer spending has been on a choppy road since getting a post-holiday boost at the start of the year. Part of that is due to not-so-fantastic wages for many workers but a huge part of it is due to Brexit concerns. See, the uncertainty over what could happen in case the U.K. does leave the EU is putting a strain on the daily household budget.
Market players are expecting a 0.3% growth in retail spending after seeing a 1.3% bump in April. Is the summer season enough to entice the U.K. shoppers back into parting with their moolah? Whatever the case may be, you must also remember that the BOE is scheduled to print its decision on the same day, so expect to see either a muted reaction or a bit of profit-taking before the BOE’s event.
BOE’s Policy Decision
Thursday, June 16
Official bank rate and policy summary (12:00 pm GMT)
BOE Governor Mark Carney’s speech (9:00 pm GMT)
The finale for the U.K.’s roster of major economic events is none other than the central bank’s monetary policy decision. The Monetary Policy Committee (MPC) isn’t expected to make any changes to its interest rate and asset purchasing programs.
Instead, we should look out for Mark Carney’s presser scheduled a few hours after the BOE’s official statement. Specifically, watch out for any comments on the impact of the Brexit vote on the U.K. economy and the options that the BOE is considering in case the “Leave” camp reigns supreme. The last time Carney took the center stage he talked about the Brexit “materially” altering the BOE’s growth outlook. Heck, he even threw out the “R” word!
So, have you decided which U.K. event you’re trading, yet? No matter your decision is, remember to practice good risk management when placing your trades. Oh, and don’t forget to keep close tabs on the Brexit headlines anyway!
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