Friday saw the United States Core Personal Consumption Expenditure (Core PCE) post a 4.8% increase in inflation in June, a slight increase from the 4.7% from May. The PCE is the Fed’s preferred way metric to measure inflation as it takes into account the changes in prices of goods and services purchased by consumers for the purpose of consumption, and adjusts to consumer behaviour as it is chain-weighted. The figures reveal that inflation is still on the rise in the US, however, it is losing momentum as the monthly increase is only 0.1% compared to the 0.8% of the month before, a sign that the Fed’s measures with the increase in interest rates may effective in slowing down inflation, and could see the next few hikes go down to 50 basis points.
Industrial activity in the eurozone is slowing down with French, Spanish and wider eurozone manufacturing PMIs all in contraction. Spanish PMI stood at 48.7 in July, French at 49.5 and Eurozone at 49.8. German retail sales also decrease by -1.6% in June, a big disappointment as it grew by 1.2% in the previous period, and was expected to slow down to an increase of 0.2%, but the slowdown seems to have happened a lot quicker than anticipated as Germany finds itself battling with rising energy costs due to the situation on the Nord Stream pipeline with Russia.
The United Kingdom on the other hand remains dynamic with an industrial activity that remains in expansion. Manufacturing PMI stood at 52.1 in June, a slowdown from the 52.8 in June, but nevertheless a much better figure than its European counterparts.
China also had its industrial activity results, and with covid related measures and the slowdown of the American economy, the manufacturing PMI went down to 49.0 and in contraction once more in July, after it finally broke the 50.0 mark in June for the first time since the beginning of the spring in April.
Cable remained stable Friday but saw 1.37% increase over the week. GBPUSD opened at 1.2004 Monday and closed at 1.2169 on Friday.
GBPEUR followed a similar trend. The pair opened at 1.1755 and closed at 1.1902 last week, a 1.28% increase.
EURUSD remained stable throughout the week. The pair opened at 1.0212 and closed at 1.0218.