The UK Prime Minister Boris Johnson will face vote of confidence this Monday as dissatisfaction in his leadership has been mounting over recent months. OPEC to deliver a modest increase in output while preserving its alliance with Russia. US employers added more new jobs than expected in May with payrolls rising by 390,000, according to new data. In Europe, the ECB plans to support vulnerable countries who might be impacted by a raise of interests rates.
This Monday, Graham Brady the chairman of the 1922 Committee which oversees the Conservative party’s leadership challenges announced that the threshold of 15% of Conservative lawmakers (or 54 of the 360 current Conservative Party MPs) had been exceeded. Conservative MPs are required to write a letter to the chairman to trigger the vote. The vote will take place this Monday evening between 6pm and 8pm London time (7pm and 8pm CET). The Prime Minister faces criticism over a number of issues from the Partygate where 10 Downing Street held an office party in the midst of lockdown restrictions nationwide, as well as core policy issues such as the plan to send asylum seekers to Rwanda, the complicated situation of Northern Ireland following Brexit, as well as numerous scandals that have marked his cabinet in the last two years.
OPEC has announced last week they would increase production to 650,000 barrels per day in July and August, a big increase on their previous agreement of 430,000 barrels per day. The announcement came on Thursday and includes the OPEC members as well as 10 other countries led by Russia. The increase is however insufficient to trigger a sustainable decrease of oil prices as the modest increase fails to assuage concerns over a widening deficit supply, as shown by the Crude Oil Inventories data in the US on Thursday which saw a decrease of 5.068 million barrels.
The United States confirm good results in the job market after a bad start of the year with Nonfarm payrolls increase by 390,000 in May as the unemployment rate is held at 3.6% for the third month in a row. However, in recent weeks, some big companies have announced plans to slow or halt hiring, such as Amazon or Walmart, as profits have decreased due to rising prices globally.
In Europe, the European Central Bank is set to strengthen its commitment to protect and support vulnerable eurozone countries debt markets such as Italy as the fear of a sell-off mounts. The ECB is set to announce the first increase in interest rates in more than a decade, and the move could leave the borrowing cost for some members get out of control. The 25 governing members are expected to support a proposal to create a bond-buying scheme similar to the one set in the midst of 2008 financial crisis. Under the current bond-buying scheme, the ECB already has €200bn to spend on stressed government debt.
Cable saw the USD make big gains last week with positive labour market results and a closed UK market due to bank holidays. GBPUSD opened at 1.2639 and close slightly over 1.2488.
GBPEUR saw the pair opening at 1.1748 and closing at 1.1650 last week, showing strong gains for the EUR.
EURUSD also saw some stability but the good Nonfarm payroll results led USD to make substantial gains at the end of the week . The pair opened at 1.0770 and closed at 1.0719 last week
