 Hello and welcome to CMC Markets on Thursday the 21st of June and a quick look at the week beginning the 25th of June. Before we get on to that let's have a quick look back at the events of the last few days and they've been dominated largely by concerns about escalations in trade wars that's that can be no better illustrated in the way the DAX has performed over the course of the past few days. A number of German car companies have issued warnings to that effect that potential trade tariffs could well impact their forward earnings potential. That's seen Daimler shares sell off quite aggressively and we've seen the DAX push lower for the last five days with the prospects that we could break below this key support level around about 12,500 that's been the base thus far for the past three to four weeks. So concerns about trade likely to remain front and center we've also had an OPEC meeting and the likelihood is we will see a production increase and that in itself is likely to prompt a little bit of a test to the downside in the Brent crude price we're certainly seeing some evidence of a top starting to form here we can draw a line through the peaks from the recent highs in May and I think as long as we remain below this trend line there's a decent chance we can come back and test the original breakout point which I identified a few weeks ago in a video around about $71.65 how we react from there is anybody's guess but ultimately I think whatever OPEC agree and I think they will agree a production increase it could be generally a case of sell the rumor and then buy the fact but ultimately I think in the short term I think central bankers will be hoping that we've hit the peaks when it comes to the rise in oil prices that we've seen over the past few days but I'll certainly be keeping a very close eye on this trend line here from the lows that we saw almost to this day a year ago this is all one-year uptrend line now we can we can redraw it so that it takes in these lows through here but ultimately around about $71 I think is going to be a very very key a very very key level when it comes to where we go to next and I think also if we look at this in very much closer detail could this be the beginnings of a potential head and shoulders reversal for crude oil prices okay so I mean that's basically the key levels that I'm looking for with respect to Brent crude the German DAX more importantly it's been an important week for the pound as well and I think it's particularly timely with respect to the pound given the fact that it's going to be the two year anniversary since the Brexit vote now we have a whole host of economic data coming out next week from the UK economy but one thing I do want to draw your attention to is if you actually look at UK GDP since the Brexit vote we haven't really you wouldn't have even known that there had been a referendum vote particularly given the fact that we heard all these portents of doom and gloom in the lead-up in the event of a no vote we did see a short-term hit but ultimately if we look at a GDP table for the UK economy you can see that in 2016 we posted some decent quarterly numbers 0.6 0.7 last year we saw 0.2 0.3 0.4 0.4 obviously the previous the current quarter or the first quarter of this year we saw 0.1 and we're going to get the final revision for that first quarter GDP number this coming week on the 29th of June obviously a combination of bad weather in March a sharp slowdown in the construction sector because of the woes of Carillion is likely to see a fairly lackluster if almost stagnant UK economy in the first quarter but certainly the data that we've seen since then particularly in services and retail sales has shown a significant rebound and I think that's probably why we saw the Bank of England's policymaker shift ever so slightly to a slightly more hawkish stance with the 6-3 split that we saw on the Monetary Policy Committee arguing for a rate rise in bank rates from 0.5 to 0.75 now I think it's important not to overestimate why that has driven the pound up from the lows that we saw at 1.31 10 earlier today but what is important and interesting I think in this context is the fact that we were able to respect this trend line on this cable chart that I drew from the lows of early last year 2017 we respected that more importantly we've also had our minimum price objective from our reversal breakout that we highlighted at the beginning of May the minimum price objective for this move down was 1.31 10 we've met that and now the big question is where do we go from here now I think one of the reasons why the Bank of England NPC was slightly more hawkish in its statement on Thursday was the fact that since Mark Carney made those comments that a May rate hike was not necessarily the done deal markets thought it was we've seen the pound drop from 1.43 down to 1.31 and that's an 8% decline in as many weeks and that for me is not something the Bank of England would wanted to continue for any length of time because it throws into significant doubt their inflation target they downgraded their inflation target in the May inflation report a lower pound pushes inflation up it's the last thing they want particularly the time when oil prices are on the up so I think there was a bit of tactical voting going on here because ultimately I still think they want to keep the prospect of an August rate rise on the table that will also be Ian McCafferty's last meeting as an NPC member and if they're going to raise rates then then I think ultimately we want to see Ian McCafferty on the committee but obviously we'll also need to see the data continue to improve the way that it has done over the past two months and it has been good in April it's been good in May it's also likely fairly positive I think in June because of the World Cup and you're likely to see quite an awful lot of liquid refreshment consumed over the pools over the course of the past few weeks always assuming that England managed to stay in the competition on the subject of inflation and consumption we've also got EU CPI out this week on the 29th of June also the same day is first quarter GDP and again we've seen that start to show signs of life and I think that's one of the reasons why the ECB is making it quite you know was was quite clear in its wish to end QE by the end of this year but on the flip side I think they are concerned that it might be slightly transitory and that's why they pushed back expectations of a rate rise to the back end of 2019 always assuming that we get a rate rise next year at all it's all about managing expectations and ultimately if you're expecting the Fed to raise rates and other four or five times over the course of the next 12 months what you don't want to see is your currency depreciate too much too quickly against that sort of backdrop we've also got first quarter final GDP for the United States and that's coming along with the latest core PCE numbers we've got inflation first quarter GDP for the United States coming out on the 28th and the 29th of June so big week for GDP revisions and also a big week for inflation so key levels as I've reiterated on crude oil on the German DAX more importantly on the pound against the dollar if we can hold above 130 110 then I think there's a decent chance we can head back and retest the highs of around about 134 60 so that's it for this week thanks very much for listening it's Michael Houston talking to you from CMC Markets