The pound has begun the day losing some ground against an in-demand dollar in early trading, but remains on track for its first monthly gain against the greenback in the past 5 months. Against the euro, sterling remains largely unchanged. Despite its recent recovery against the dollar, data released yesterday by the Commodity Futures Trading Commission (CFTC) showed traders adding slightly to their sterling net “short” positions last week, which now stand at $6.3 billion, the largest since 2019. According to the Citi/YouGov monthly survey, British public expectations for inflation held stable this month. The survey released yesterday showed inflation expectations for the coming year edged up to 6.1%, matching March’s record high and up from 6% in April.


The euro lost some ground against the dollar following the announcement by European Commission President Ursula von der Leyen that EU leaders have reached an agreement in “principle” on banning oil imports from Russia. Von der Leyen tweeted that the EU Council should now be able to finalise a ban on almost 90% of all Russian imports by the end of the year. The embargo covers Russian oil brought in by sea, allowing a temporary exemption for imports delivered by pipeline, a move that was crucial to bring Hungary on board with a decision that required consensus from the bloc. Market attention this morning will be on the release of inflation data for the Union. Recent figures from Germany and Spain showed consumer prices continuing their march upwards, setting the stage for more record aggregate inflation data for the bloc in May.


The dollar showed a slight revival against its rivals in early trading as US Treasury bond yields pushed higher, creating a demand for the greenback. It also found support from safe-haven flows, when data released from China showed business activity in the manufacturing and services sectors continuing to contract in May. In an editorial story for the Wall Street Journal, President Joe Biden outlined his plan to fight inflation. His comments come ahead of today’s meeting with Federal Reserve Bank Chairman Jerome Powell, called for by the Whitehouse, to discuss the state of the American and global economy.

Economic Calendar

10:00 EUR HICP (YoY)(May)
14:00 USD Biden-Powell meeting
14:00 USD Housing Price Index (MoM)(Mar)
15:00 USD Consumer Confidence (May)