GBP

Sterling has begun the week managing to hold on to last week’s gains against the dollar and remains within its recent tight range against the euro in early trading. The pound showed little reaction to the latest letter of no confidence submitted by a conservative MP on Friday. Bob Neill, the Chairman of Parliament’s Justice Committee, said an official report on the lockdown parties issued last week showed a pattern of “unacceptable behaviour” over months during the covid crisis. He added that he did not find PM Johnson’s explanation to be credible, as he announced he would submit the letter calling for a confidence vote in Johnson to the Tory party’s 1922 committee. The charity that sets Britain’s “real living wage”, a voluntary pay rate adopted by thousands of employers, said on Sunday it will bring forward the announcement for the 2022/23 rate to September from November because of high inflation. The Living Wage Foundation said it would encourage employers to pay the new rate, which is designed to reflect the rising cost of living as soon as they can. More than 10,000 businesses, including Google, have signed up to pay the real living wage, which is calculated by the Resolution Foundation, a think tank that focuses on living standards.

EUR

The euro remains on the front foot against a broadly weaker dollar in early trading. European Union leaders are due to agree at a summit later today that the 6th sanctions package under preparation should include an embargo on Russian oil imports but exclude pipeline crude oil deliveries. Over the next two days leaders of the 27-nation bloc are due discuss how best to aid Ukraine and how to deal with the conflicts impacts of high energy prices and food shortages. In an interview with Cinco Días, a Spanish business and finance newspaper, ECB Chief Economist Philip Lane said that the central bank should raise interest rates by 25 basis points at their July and September meetings, echoing Bundesbank Chief and governing council member Joachim Nagel who on Friday called for a July hike and another to follow in the second half of the year. With no US data due for release today, Germain inflation data will be the highlight of the economic calendar.

USD

The dollar was under pressure in early trading, heading for its first monthly drop in 5 months as market sentiment improved, amid fears of a global recession easing a little. The market took a positive tone from news that authorities in Shanghai have announced that some lockdown measures imposed on businesses will be lifted from Wednesday. Plans have also been introduced to support the city’s economy, which has been hit hard by the restrictions, with the commercial centre having been under a strict lockdown for almost two months. Authorities in Beijing also eased curbs in several parts of the city after officials said the covid outbreak is now under control. The Memorial Day public holiday in the US today is likely to make rate movements somewhat subdued this afternoon.

Economic Calendar

13.00 EUR GER Harmonised Index of Consumer prices