Today's headlines: Poor weather hampers construction and shopping | US FED holds rates at 23-year high | Sterling strong against euro weakness

Poor weather hampers construction and shopping

Yesterday started off with UK GDP data which showed that the UK failed to grow.? Official figures for April largely came in as expected at a flat 0.0%, having previously grown by 0.4% in March.? The ONS said there was a slowdown in construction and shopping due to a particularly wet April – with rainfall for the month well above the long-term average.?The Bank of England will look at this, along with other key data, next Thursday when it meets to decide what to do regarding interest rates.? Currently, UK interest rates remain at 5.25% - their highest level for 16 years.? The next BoE rate cut is due around August/September and has been largely protracted due to the UK election.

US FED holds rates at 23-year high

The big news of yesterday was stateside where the US Federal Reserve held rates at the 23-year high of 5.50%, as expected.? More importantly, the Fed signalled that it will cut its key interest rate just once this year despite inflation coming down.? This is a more hawkish tone than in March when the central bank had been expected to reduce borrowing costs three times by the end of 2024.?Jerome Powell, Chair of the Federal Reserve, said that only ‘modest’ progress had been made on hitting the Fed’s 2% inflation target and that we would need to see ‘good inflation reading’ before rates can be cut.? US inflation currently sits at 3.3% having remained unchanged between April to May.

Sterling strong against euro weakness

Sterling remains at elevated levels across the board, particularly against the EUR where it sits at an almost 2-year high of 1.1850.? EUR weakness has been caused by a general dovish stance from the ECB as last week it became only the second G7 nation, after Canada, to cut interest rates.? More recently, however, the EUR has taken a hit following the announcement of a snap French election by Emmanuel Macron.? This comes following significant gains by far-right political groups across Europe.?Generally, elections promote political uncertainty and therefore drive bearish sentiment for their respective currency.

Today the focus will be on US unemployment claims and tomorrow’s US consumer sentiment.?

Today's Major Economic Releases

01:30 AUD Employment Change s.a.(May)?

01:30 AUD Unemployment Rate s.a.(May)?

12:30 USD Producer Price Index ex Food & Energy (YoY)(May)?

Interbank Exchange Rates