• Economic releases still having some impact despite Brexit focus
• Today’s FED Interest rate decision
• Tomorrow’s UK retail sales and BoE Interest rate decision
• GBPEUR and GBPUSD on the rebound
• Mario Draghi’s speech on Friday

Despite the EU referendum now only a week away, Pound Sterling has clawed back some of its recent losses this morning due to lower unemployment rates and higher average earnings. The news will be welcomed ahead of the referendum and demonstrates that economic releases still have some impact despite heavy focus on the Brexit polls.

In the last 24 hours Sterling has managed to claw back 1 cent against both the Euro and US Dollar which has cushioned the blow against a potential Brexit, which appears to be gathering more momentum with odds of a Brexit now much higher than originally anticipated. With the EU referendum next week in mind, there are some important releases and updates this week which could provide some support for Sterling against the Euro and US Dollar.

FED Interest rate decision today

The FED decision today is expected to be a no show which I expect to have limited impact on USD. Investors would have already priced in the odds of a hike which is estimated at 2%. This morning’s US economic releases once again show a mixed outlook. Mortgage applications are down 2.4% alongside Industrial production and production capacity. None of which will boost any odds of a hike and none of which will help boost inflationary figures.
GBPUSD has managed to scrape through the 1.42 barrier at the time of writing and will likely remain here during and after the FED meeting this afternoon. I envisage that Yellen will reiterate her points in her previous statement, regarding US data and the concerns regarding the upcoming referendum.

Ahead of the ECB’S meeting on Friday

Mario Draghi, president of the ECB has made a number of statements surrounding the EU referendum and has pledged to “do whatever it takes to calm the markets in the event of a Brexit”. Mark Carney will be meeting with the president on the 23rd of June to discuss options in preventing market panic and opening potential swap lines allowing for unlimited funds for banks. As of yet the ECB and BoE have declined to comment on claims but measures are being implemented to reduce the impact a Brexit might endure.

The Euro has not been resilient to market movements and further economic news this week could weaken the currency further prior to the outcome on the 23rd. Consumer price figures and labour costs for Q1 will be released prior to the Draghi’s speech on Friday which will likely have limited impact on GBPEUR rates. Draghi will most likely address the upcoming EU referendum and the impact a Brexit would have on the economy.

In the event the UK were to leave the EU I believe that the EU would be under serious pressure to make up the budget deficit that the UK previously filled. Given that the UK is one of the few nations in the EU that contributes more to the EU than it takes. Germany, France and Spain would have to make up a large majority of the black hole the UK left behind.

A Brexit therefore, could signal just as much if not more damage to the EU than the UK.