By Kian Songra
The week kicks off on Monday, May 5, with a quiet start. UK markets are closed for the May Day Bank Holiday, but there’s still action in the US, where the ISM Services PMI will provide an important update on the health of the service sector. This comes just days after disappointing US GDP data showed the economy grew only 1.6% in Q1, down from 3.4% in the previous quarter. The sharp slowdown has raised recession fears, so markets will be watching closely to see if the services sector is holding up.
On Tuesday, May 6, things remain fairly quiet in the UK and US, with no major data scheduled. That puts the spotlight on Europe, where we’ll get a first look at April inflation numbers. The Harmonised Index of Consumer Prices (HICP) readings from key countries like Germany, France, and Spain will be closely watched, as investors look for signs that inflation is cooling enough for the European Central Bank to consider rate cuts in the months ahead.
Wednesday, May 7, is shaping up to be one of the most important days of the week. In the UK, we’ll get the latest Construction PMI, which gives a snapshot of activity in the building sector. But the big event is in the US, where the Federal Reserve will announce its latest interest rate decision. No rate change is expected, but all eyes will be on Chair Jerome Powell’s press conference. Markets will be looking for clues on how the Fed views recent tariffs, weaker growth, and still-stubborn inflation. Any shift in Powell’s tone could move the dollar sharply. Over in Europe, retail sales data will be released, giving an updated look at consumer spending across the Eurozone.
On Thursday, May 8, the focus shifts to the UK for “Super Thursday”, the day the Bank of England (BoE) delivers its latest interest rate decision, Monetary Policy Report, and a press conference from Governor Andrew Bailey. With inflation easing and wage growth slowing, markets are starting to price in a rate cut of 25bps this meeting. Bailey’s comments will be key to understanding the BoE’s thinking for the summer. Elsewhere, France’s markets will be closed for Victory in Europe Day, while the European Central Bank releases its Economic Bulletin, outlining the latest economic trends. In the US, the weekly Jobless Claims data will offer fresh insight into the health of the labour market.
The week wraps up on Friday, May 9, with more central bank chatter. Governor Bailey will speak again, this time at the Reykjavík Economic Conference in Iceland, giving markets another chance to assess the BoE’s policy direction. In the US, Fed officials will begin making public comments again after their pre-meeting blackout, offering follow up views to Powell’s earlier message. Meanwhile, traders will be watching China’s trade data for any signs of how new US tariffs are impacting global commerce.
Looking across the whole week, US trade tensions and the tariff narrative will remain a key theme. With both the Federal Reserve and Bank of England in the spotlight, and fresh data from the Eurozone in play, this week could prove pivotal for global markets; especially in shaping expectations around interest rates, inflation, and currency moves as we head toward the summer. Stay in close contact with your currency consultant to discuss your options ahead of your upcoming currency requirements.