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The UK should begin negotiations on withdrawal from the EU until the end of June. Against the background of growing uncertainty, the pressure on the pound will increase. In any case, Brexit will have negative consequences for the British economy, economists say.
The dollar declined as a result of last week. Ambiguous report on the US labor market, published last Friday, led to a sharp drop in the US dollar. According to the US Department of Labor, unemployment in May fell by 0.1% to 4.3%, the lowest level in 16 years. However, other details of the employment report disappointed market participants.
Aggravated in the US political uncertainty caused last week sales in the world stock markets, primarily American, and a sharp decline in the dollar. Investors are increasingly questioning the ability of the Donald Trump administration to carry out tax reforms and implement budgetary stimulation of the economy in order to accelerate its growth.
As the head of the ECB Mario Draghi stated in his speech to the legislators of the Netherlands last week, “it is still necessary to maintain the current very significant monetary stimulus for further growth of the basic inflationary pressures. It’s too early to talk about the final success”. The passions about the presidential elections in France have subsided, and the extra soft monetary policy of the ECB is again on the forefront.
As expected, the Bank of Japan and the ECB left their monetary policy unchanged last week. The focus of the new week will be the decision of the Fed on the interest rate (published on Wednesday at 18:00 GMT), the publication on Friday (12:30 GMT) of data from the US labor market in April. As always, the publication of a number of important macroeconomic data is expected on the beginning of the trading week and several important news are published.
The result of the previous week was the strengthening of major European currencies, as well as a fairly sharp drop in oil prices. After Tuesday, British Prime Minister Theresa May unexpectedly announced early parliamentary elections, the pound has sharply strengthened in the foreign exchange market. Strengthening the pound was accompanied by the fall of the British stock market. Following the FTSE100 index, which lost almost 2.9%, all European major stock indexes followed, which led to a sharp strengthening of the euro.
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