Boris Johnson Survives Rebellion.

Prime Minister Boris Johnson saw off a large rebellion last night after it was confirmed that more than 54 members of the Tory party had submitted a vote of no confidence to the 1922 committee which led Grant Brady to hold a confidence vote. The vote saw the Prime Minister kept his job with 211 voting for and 148 voting against, although he was just 22 votes away from the threshold and 15 votes worse off than Teressa May back in 2019.

Weighing on the pound is the growing concerns of a recession with the Bank of England deciding on an aggressive approach to interest rate hikes with another five hikes expected in 2022. There are very few data releases coming this week that will have an impact on the pound, so it may be a case of the ongoing discontent within parliament which dominates the movement of the currency.

Christine Lagarde is due to speak this week as the European Central Bank come’s to a decision on weather to hike interest rates within the Eurozone with expectations that there will be no change to the rates this week. With inflation figures throughout the Eurozone still rising across the continent with Spain (8.7%), Belgium (8.97%) and Netherlands (9.6%) as well as the overall continent having an inflation figure of 8.1%, could this be the catalyst for the ECB to start hiking interest rates from next month if there is no move on Thursday.

Elsewhere in Europe there are no signs of a peace agreement over in Ukraine as they plead for anti-ship weapons to fight off the Russian brigade in the black sea. Macron and Scholz have also been speaking with Putin pushing for the Russian to sit down for peace talks with his Ukrainian counterparts which currently is not looking likely. The impact on Ukraine exports of oil and wheat are not just having an impact on European supply chains but also across the globe which is another factor pushing inflation higher.

The strong bounce back continues for the US economy following the pandemic which was reflected in Friday’s Nonfarm Payrolls figure coming out above the expected 325k seeing a figure of 390k. Fed Vice Chair Brainard came out on Thursday saying the Fed is seeing mixed signals on the economy, but the number on priority remains getting inflation down. Brainard added that she does expect to see some cooling of the economy over time, and that she does expect to see some moderation and a better balance in the labour market.

Japan officials are back on alert after Yen sets fresh 20-year lows. Bank of Japan’s Kuroda insists they will stick with ultra-low-rate stance going forward. Senior Japanese government officials said they were closely watching currency markets with a sense of urgency Tuesday as they returned to a heightened state of alert following a renewed slide in the yen to fresh two-decade lows.

Economic Calendar

Expected Previous
04:30 AUD RBA Interest Rate Decision 0.6% 0.35%
06:00 German Factory Orders s.a. (MoM)(Apr) 0.5% -4.2%
12:30 US Goods and Services Trade Balance(Apr) -$89.5B -$109.8B
23:50 JPY Gross Domestic Product (QoQ)(Q1) -0.3% -0.2%

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.