Amidst the backdrop of a complex and ever-evolving global landscape, the world of economic finance marches forward, exhibiting its resilience even in the face of heightened political tensions. Notably, the Israel-Palestine conflict has not only added to the prevailing political turbulence but has also contributed to economic volatility. This turbulence has once again underscored the appeal of safe-haven currencies, with both the US dollar and the Swiss franc regaining their allure as investors seek stability in these uncertain times.

Over the past few weeks, there has been a growing sense that the British Pound was on a trajectory towards weakness. Recent developments now suggest that this is almost a certainty.

The week began with a significant development in the United States. Tuesday saw the release of the latest Retail Sales figures, which caught many by surprise as they trended upward. This unexpected surge had a substantial impact on the GBP and the EUR, causing heavy losses against the USD. M/M figures were initially forecasted to come in at 0.2%. However, they ultimately exceeded expectations, registering a 0.6% increase (although this was still a slight dip from the previous reading of 0.9%). This data hints at the persistence of inflationary pressures in the US, suggesting that the story of inflation in the US is far from over.

In the United Kingdom, the next significant economic event was the release of the CPI inflation figures. These figures were in line with expectations, with the forecast suggesting a 6.6% rate and the actual reading coming in slightly higher at 6.7%, mirroring the previous reading.

On a different note, Jerome Powell, Chairman of the Federal Reserve, delivered a keynote speech that captured the attention of financial markets. Powell acknowledged that inflationary pressures seem to be cooling off, but he maintained the Fed’s commitment to achieving its 2% inflation target. Interestingly, he hinted that a rate hike in November is becoming increasingly unlikely.

Early today, the UK retail figures were published, with the forecast suggesting a modest decline of -0.3%. The actual figure was far less favourable, indicating a more significant drop at -0.9%. This decline implies a slowdown in the UK economy, which, when viewed in conjunction with the persistent CPI figures from earlier in the week, may be seen as a welcome sign by the Bank of England, hinting at a slowdown in inflationary pressures.

Looking ahead, the upcoming week promises to be a busy one. The week commences with the PMI Tuesday with the UK, US and Eurozone posting their latest results. A key indicator of economic health, closely watched for its psychological impact on markets. Notably, the ECB is set to announce its next interest rate decision on Thursday. While it’s widely expected that the ECB will maintain its base rate, any indications regarding potential future rate hikes or cuts will likely induce market volatility.

On the same day, the United States is scheduled to release its latest GDP figures. Powell’s recent comments regarding the necessity of witnessing a drop in growth to curb inflation have increased the significance of this data release. It will be closely monitored to gain insights into the trajectory of the US economy and its potential implications for monetary policy.