09 June 2025

GBP

The UK starts the week with a light calendar, but activity picks up from Tuesday with the release of employment and earnings data. The Claimant Count is expected to rise, while the Average Earnings Index is forecast to show a slight slowdown compared to the previous month. These figures will be closely watched for signs of resilience in the labour market amid persistent economic uncertainty.

On Wednesday, Chancellor Rachel Reeves will deliver her spending review statement to Parliament. Markets will be seeking clarity on fiscal priorities and any new spending commitments that could impact growth and inflation expectations. This is traditionally not an event of focus but appears to carry significant weight this year with the spotlight on UK economic health.

The spotlight then shifts to Thursday, when the UK will publish its latest GDP figures. A contraction is widely anticipated, with forecasts pointing to -0.1% growth. Such a reading could weigh on the pound and reinforce expectations of a Bank of England rate cut in the coming months. While next week’s BoE meeting is expected to deliver a relatively straightforward decision, this week’s data could still influence the tone of the central bank’s communication.

EUR

The Eurozone begins the week slowly due to bank holidays in France, Germany, and Switzerland. The euro remains sensitive to broader USD movements and diverging monetary policy expectations between the European Central Bank and the Federal Reserve.

The European Central Bank has maintained a cautious stance, signalling a pause in rate cuts amid ongoing uncertainty around inflation and consumer confidence – despite inflation falling below its 2% target for the first time since the cost-of-living crisis began in 2022.

However, recent data from the bloc has been mixed, with Germany’s industrial weakness continuing to weigh on sentiment and PMI data from across the economic area still lingering around or below the key 50 threshold that separate growth from contraction.

The primary data point for the Eurozone this week is scheduled for release on Friday, with the publication of PMI figures, which will provide a timely snapshot of the health of the manufacturing and services sectors across the region.

USD

The week begins on a quiet note, with no significant geopolitical developments over the weekend and a relatively subdued economic calendar.

However, Friday’s Non-Farm Payrolls report provided some momentum. The US economy added 139,000 jobs in May, slightly above expectations, but this was offset by significant downward revisions to the March and April figures, which saw a combined 95,000 jobs removed. This trend of initially strong job reports being revised lower has become a recurring theme in recent months.

Despite the revisions, the dollar strengthened, gaining around 0.5% and edging closer to the 100 level on the dollar index. Market participants are now closely watching how the dollar will respond should the Federal Reserve resume its easing cycle. The key question is whether this will accelerate the USD weakness narrative or if the market has already adjusted its positioning.

This week’s focus turns to inflation data. On Wednesday, the Consumer Price Index (CPI) is expected to show a 0.4% month-on-month increase, offering insight into the current inflationary environment. On Thursday, attention shifts to the Producer Price Index (PPI) - the Fed’s preferred inflation gauge - which is forecast to rise by 0.2%.

Also on Thursday, the Treasury will auction $22 billion in 30-year bonds, a sale that will be closely watched amid rising concerns over US debt levels and soaring yields, which recently touched a near two-decade high of 5.15%. The week concludes with the University of Michigan Consumer Sentiment report on Friday, which will provide a snapshot of current and future economic perceptions among US consumers.

Views expressed in this commentary are those of the author, and may differ from your appointed Moneycorp representative. This commentary does not constitute financial advice. All rates are sourced from Bloomberg and forecasts are taken from Forex Factory.