he Dollar also did well, as markets were relieved that the rhetoric and threats on world trade may be ratcheted down for now. In a week without major news or central bank meetings, that was enough to put the Dollar at the top of the G10 table.

All eyes now turn to the Fed meeting on Wednesday. No changes are expected in the policy rate, but markets will be paying close attention to every word in FOMC communications for a sense of the likelihood and extent of any cuts.

GBP

Last week saw mixed data out of the UK. Weak April GDP growth numbers and manufacturing output were counterbalanced by strong job creation and solid wage growth. However, little of this mattered with the markets completely focused on the leadership fight in the Conservative Party and its impact on the Brexit negotiations.

With markets pricing in an almost certain victory for Boris Johnson, focus should shift to the June meeting of the Bank of England this week. No change to policy is expected, but most economists are expecting a more negative assessment of the economic outlook from the MPC. Should this fail to materialise, we could see Cable rallying towards 1.30 over the short term.

EUR

The only important piece of data coming out of the Eurozone last week was a weak print in industrial production, down 0.5% in April after a 0.4% fall in March. These are volatile numbers and prone to revision, but so far there is no recovery in sight for the European industrial sector.

Data this week will also be sparse, but there is a key ECB event in Portugal, the Sintra forum on central banking. We expect the ECB to further clarify its views on the future direction of policy.

USD

Now that the Mexican tariff story has got stale, Trump is spending his time tweeting about the need for the Fed to cut rates. At the Federal Reserve meeting on Wednesday, we will see how well the FOMC deals with the political pressure on it too easy policy.

No immediate change in policy is expected. The focus will, however, be on the Fed messaging for future meetings. We think that markets, which are pricing in three full cuts by the end of 2019, have got ahead of themselves and may be negatively surprised by less dovish Fed communications. If we are correct, it will be very interesting to see the extent to which the dollar rallies in the short term.