GBPUSD is struggling to break higher above its 200-day simple moving average at ~1.2543.

Stronger than expected wage data could push cable up to its 50-day simple moving average at ~1.2599, while softer numbers might see the major pull back towards 1.24.

The recent Bank of England meeting showed that policymakers are inching towards a rate cut, but it is keen to keep its options open.
 

The debate is around a June or August move and this week’s wage data will be a part of that decision making.

There is another employment report as well as two releases of inflation figures before the June MPC meeting.
 

Events Watchlist:

• Tuesday, May 14: UK March Average Weekly Earnings

Wage growth data is one of the key metrics the Bank of England have cited as being a major part of their policy making.

The unemployment rate is expected to tick up, but earnings have so far proven sticky as the labour market tries to find a balance. An upside surprise in wages should support GBP.

• Thursday, May 15: US April Consumer Price Index (CPI), Retail Sales

Consensus predict core US CPI m/m to tick one-tenth lower to 0.3%, while retail sales are forecast to slide to 0.4% from 0.7% in March.

Economists reckon core prints of 0.2% m/m are needed to bring inflation back to target over time.

 An inline inflation print will likely underpin support for the dollar, with Fed rate cuts not seen until after the summer.

• Friday, May 17: China April Retail Sales, Industrial Production, Fixed Asset Investment

These are the big three major economic activity releases in China. All are expected to see a small increase in year-on-year growth.

But there is lingering uncertainty about the labour market and with it, consumer activity. That means growth could continue to come from industrial expansion.

Strong data may boost cyclical currencies like AUD and NZD, and at the margin GBP.

Here’s a comprehensive list of other key economic data and events due this week:
Monday, 13th May

• AU200: NAB Business conference
• NZD: New Zealand food inflation YoY, Services and Composite PCI
• USDInd: Fed Jefferson speech, Fed Mester speech
• CHF: Consumer Confidence

Tuesday, 14th May

• JP225: Japan PPI
• GER40: ZEW Economic sentiment index
• UK100: UK Unemployment rate, BoE Pill speech
• USDInd: US PPI, Fed Chair Jerome Powell speech

Wednesday, 15th May

• CAD: Canada housing starts
• CN50: China one-year medium-term lending facility rate
• EU50: GDP, Employment change, Industrial production
• USDInd: US CPI, retail sales, Fed Kashkari speech, Fed Bowman speech

Thursday, 16th May

• AU200: RBA Hunter speech, Unemployment rate
• JP225: Japan GDP
• UK100: BoE Financial stability report
• EU50: ECB Financial Stability review
• USDInd: Initial jobless claims, Building permits, Industrial production, Fed speech

Friday, 17th May

• CN50: China industrial production, Retail sales, Unemployment rate
• HK50: Hong Kong GDP (final)
• CHF: Industrial production
• UK100: BoE Mann speech
• EU50: EU inflation rate (final)
• USDind: Fed Waller speech

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