Morning Report: 30 May 2017

30th May 2017 By: Ranko Berich

GBP Sterling strengthened slightly over the course of the May Bank Holiday, and managed to hold on to its progress against the euro while falling back against USD. In lieu of a direct debate between Theresa May and Jeremy Corbyn, both were interviewed by Jeremy Paxman and subjected to something resembling robust questioning. Neither were truly pushed on their key areas of weakness, with Corbyn evading questions on defence and May providing her usual soundbite soup on issues such as social care and policing. Sterling did indeed wobble at the same time as opinion polls began to narrow last week, possibly suggesting that concern of a larger than expected turnout for Labour weighed on the pound, although the effect was not clear enough to draw this conclusion with certainty. This will be a slow week for UK data, with no releases scheduled today.

EUR The euro continued to fall this morning after comments from Mario Draghi to European lawmakers put the single currency on the defensive yesterday. Draghi’s message was nothing new; the European Central Bank President simple reiterated earlier statements about the need for an “extraordinary amount of monetary policy support” for inflation in the eurozone. This morning has already seen the release of German Import Prices, which fell 0.1%, French Gross Domestic Product Growth, which beat expectations to rise to 0.4% for Q1, and the Spanish Consumer Price Index, which saw year on year inflation fall to 1.9%, from 2.6% previously.

USD USD saw a burst of strength overnight after yesterday’s Memorial Day bank holiday. The US data calendar is eventful this week, beginning with today’s Personal Consumption Expenditures Price Index at 13:30 BST. Inflation has fallen short of expectations in recent months, and although the Federal Reserve has indicated it is confident price growth will rebound, today’s release will be closely watched and a further slowdown in inflation could hit the dollar. Later in the week Manufacturing Purchasing Managers Indices will be released on Thursday, ahead of Friday’s Non-Farm Payrolls report.

UK news

  • Telegraph: #Theresamaygifs: Prime Minister mocked on social media for debate performance. … while experts talked at length on TV and columnists wrote reams of words on it, there is arguably no political commentary more succinct than a GIF – and it wasn’t long before the hashtag #TheresaMayGIFs went viral. Unfortunately for the prime minister, the reaction was not full of praise for her performance.
  • Daily Mail: MAY VS MAYHEM LABOUR leader Jeremy Corbyn took a battering from a TV audience last night over his firebrand left-wing views. The lifelong Socialist, 68, came under fire as he and PM and Tory chief Theresa May faced their toughest pre-election grilling so far.
  • Independent: Theresa May’s plan to slash net migration to tens of thousands would double unemployment, study warns. Theresa May’s plan to cut net migration to under 100,000 a year would almost double unemployment in the UK to more than three million, according to a new study. It claims that British workers would be the main losers from lower economic growth caused by the country having fewer people to drive business expansion and, in turn, consumer demand and spending.