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Currency Market Update - 26th May 2023

Currency Market Update UK Retail Sales for April have surprisingly increased more than expected, with the non-food sector in particular showing growth of more than 1%. When comparing to March these figures are of course promising, but sales usually drop in March due to wetter weather.

More importantly, the period from February-April were up just shy of 1% and that reflects the biggest 3 month increase since August 2021. The concern moving forward will be the effects of any unemployment and consumers having to re-mortgage onto higher interest rates.

We round the week up with US Personal Consumption Expenditure data which measures the prices paid by consumers for goods and services, which is set to come out at 4.6%. Although it’s not due to show any increase, it will be a key metric for The Federal Reserve in terms of their decision making for the next interest rate decision which is due on Wednesday 14th June. In regards to the decision on the 14th June, markets are currently predicting a 74% chance that The Federal Reserve will bring an end to their rate hike cycle and leave rates unchanged 5% in order to see the economical effects from their previous rate hikes.

The focus moving into next week will be on German Inflation which is again set to drop by just over 0.5%, and the ever important Non-Farm Payrolls in The US, which as it stands is expected to come in weak for The US showing the amount of jobs created being roughly 73,000 less than May and with that the unemployment rate marginally increasing by 0.1%. Both sets of data along with today’s PCE release will no doubt play a big part in The Federal Reserve’s thinking come Mid-June.



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