GBP

It was great to see the England football team's strong start at the Euros last night! Outside of the usual moral boost successful sporting events have, according to a report by Voucher Codes, the tournament is expected to provide a £2.75bn boost to the UK economy, from food and drink sales to electricals, souvenirs, and garden cooking.

Last week was eventful - regarding both currency volatility and the political sphere.

GBP/EUR reached a new two-year high. The pound also moved up against the dollar last Wednesday following the release of the US's CPI inflation data. The pair reached levels last seen briefly in March this year and July 2023 before we entered the period of dollar strength that dominated the second half of last year.

This seems to have created a new long-term resistance level of around 1.2850, as this was the peak position seen in March before it fell away.

This week, the UK will release the latest CPI inflation data on Wednesday, June 19th. The data is expected to show a core inflation drop from 3.9% reported last month, to 3.5%. With such a significant drop expected, any deviation from these figures could impact sterling and expectations for the first interest cut, which is widely anticipated in August. 

May's inflation data is released just before the Bank of England's monetary policy meeting on Thursday. The latest UK interest rate decision and corresponding commentary may provide further insight into when markets could expect further cuts later in the year. This could mean that Thursday has the potential to be a significant day for volatility.

On Friday, the week's data releases will finish with a raft of Purchasing Managers Index (PMIs) across the UK, Europe, and the US. The UK is expected to remain in growth, with manufacturing floating at around 51 and services at 53.

EUR

One of the most significant drivers of the spiralling inflation in Europe and the rest of the world over the past few years has been the Russia-Ukraine war. Last week, world leaders addressed the conflict at the Ukraine peace summit hosted in Switzerland.

The summit followed four earlier international meetings and aimed to conduct a high-level discussion on a comprehensive, just, and lasting peace for Ukraine.

The summit had mixed success. Of the 92 countries that attended, 80 signed the agreement, with key countries such as Saudi Arabia, India, and South Africa abstaining and China not attending the summit. The outcome of the peace summit backed Ukraine's territorial integrity but didn’t lay out steps to end the war.

The week started with the ECB's President, Christine Lagarde, speaking about monetary policy and economic plans for the rest of the year this morning. On Friday, PMI data will be released in Germany, France, and the Eurozone as a whole. Europe is expected to see rangebound figures of 48 and 53.5, respectively.

The euro will be looking for some support after the snap election called by France's President Macron last weekend took markets by surprise and saw the single currency lose value against a host of major currencies.