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Brexit Blueprint

Brexit Blueprint

The Pound remains listless but the media and market focus surrounding UK political upheaval faded yesterday, despite further evidence of schisms within the Conservative Party.

Markets were waiting for the release of the government’s White Paper ““Brexit Blueprint” later today and will give the clearest idea yet of how the Government aims to trade and co-operate with the EU going forward. The blueprint will inevitably trigger further intense discussion and potentially spark fresh political turmoil which will have a significant currency impact.

Irish Prime Minister Varadkar stated that there could be negotiations on access to the single market. Sterling was also resilient in the face of weaker global risk appetite and fears over global trade policies, although the slide in oil and commodity prices did have some negative impact. Dollar developments dominated later in the session with robust US currency gains pushing the UK currency to lows around 1.3200 while the Euro weakened slightly to just below 1.1310 with markets braced for further volatility on Thursday.


The US Dollar was marginally lower yesterday as investors steer clear of the Greenback after the trade tariff comments overnight. The focus from here will be the inflation data due out today, where annual CPI (Consumer Price Index) is expected to be slightly higher at 2.9%.

US producer prices increased 0.3% for June with the year-on-year increase at 3.4% from 3.1% while core prices increased 2.8% over the year with both figures slightly above consensus. Chicago Fed President Evans stated that he comfortable with a further one or two rate hikes this year as both businesses and consumers should be able to live with slightly higher rates given that the economy is strong. Given that Evans is generally a notably dovish voice on the committee, the comments provided significant dollar backing.

China has vowed to retaliate to US measures and said yesterday that it is considering ‘other options’ than tariffs; this could possibly take the form of providing US competitors with better access to the Chinese market. That said, the prospect of new talks between the US and China has been raised by officials on either side.

The Dollar index overall gained strong support and a Euro dip below the 1.1700 level triggered fresh selling with lows around 1.1670. There was consolidation and little change Thursday as markets wait for the US CPI data later today.


Indecision was a dominant feature in Europe with markets unsure over the implications of a trade war. Yesterday afternoon there were reports of divisions in the ECB on the potential timing of a first interest rate hike and the meaning of forward guidance to hold rates until at least next Summer.

After finding support on approach to the 1.1700 level, the Euro rallied towards 1.1730 as German bond yields edged higher, although gains reversed quickly.

The ECB meeting minutes are scheduled for release this afternoon.

Data to watch:

24h EUR Eurogroup meeting
06:00 EUR Harmonized Index of Consumer Prices (YoY) (Jun)
06:45 EUR Consumer Price Index (EU norm) (YoY) (Jun)
08:30 GBP BOE Credit Conditions Survey
09:00 EUR Industrial Production s.a. (MoM) (May)
11:30 EUR ECB Monetary Policy Meeting Accounts
12:30 USD FOMC Member Kashkari Speech
12:30 USD Initial Jobless Claims (Jul 2)
12:30 USD Continuing Jobless Claims (Jun 25)
12:30 USD Consumer Price Index (MoM) (Jun)
12:30 USD Consumer Price Index Core s.a (Jun)
12:30 USD Consumer Price Index Ex Food & Energy (MoM) (Jun)
12:30 USD Consumer Price Index Ex Food & Energy (YoY) (Jun)
12:30 USD Consumer Price Index (YoY) (Jun)
16:15 USD FOMC Member Harker Speech
18:00 USD Monthly Budget Statement (Jun)

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