SUMMARY
Following Moody’s downgrade, U.S. equity futures and the dollar are starting the week on a weaker note, as markets continue to unwind U.S. exposure in a renewed sell America sentiment.
Pound movements remain relatively muted, despite the announcement of an agreement between EU and UK negotiators aimed at strengthening bilateral relations ahead of today’s summit.
This week, attention for the pound will turn to inflation data due on Wednesday. Consumer Price Index (CPI) is expected to show a rise in prices for April, with headline inflation forecast to increase to 3.3% from 2.6%, core inflation to 3.6% from 3.4%, and services inflation to 4.9%. Overall, the data are likely to reinforce the Bank of England’s recent guidance for a gradual approach to interest rate cuts, which could lend support to the pound. Additionally, UK retail sales data will be released on Friday.
In the Eurozone, markets will be closely watching the release of the European Central Bank’s latest meeting minutes for any signs of a shift toward a more dovish stance, particularly in light of the recent U.S. tariff announcements.
Also, on the agenda this week are PMI surveys from the Eurozone, U.S., and UK, as well as Germany’s IFO survey all of which will provide important insights into the economic implications of the new U.S. trade measures.
