Brexit talks on hold as UK position clarified
The UK CBI retail sales index surged to 22 in July, up from 12 previously, and there was optimism surrounding the outlook for August which provided some reassurance surrounding consumer spending trends. Mixed reports surrounding Brexit talks surfaced yesterday speculating that the next round of talks would be delayed. It could be linked to the UK’s recent proclamation of curtailment of freedom of movement in 2019; which could damage investment plans.
Sterling bounced back against the Euro, pushing above 1.1235, although there was a correction late in the European session. Meanwhile, the Pound failed to remain above 1.3100 against the Dollar. David Ramsden has been appointed as Bank of England Deputy Governor and will have a vote on the Monetary Policy Committee. There were expectations that he would be a broadly dovish member which could lessen the potential for higher interest rates during the course of 2017. Overnight, consumer confidence dipped in July.
The US Dollar staged a decent recovery yesterday, with the GBPUSD pair reversing after touching a fresh yearly high around the 1.3160 region. Following the Federal Open Market Committee (FOMC) sell-off, the Greenback rebounded sharply from 13-month lows and prompted traders to lock-in recent gains.
On the economic data front, upbeat durable goods orders, which rose to a three-year high, remained supportive of the Greenback’s recovery move and collaborated to stall the bullish trajectory against the Pound and other major currencies.
The pair bounced back slightly this morning as investors now look forward to the release of advance US growth figures for the second quarter of 2017, due for release later during the NA session. The USD price dynamics will remain an exclusive driver of the GBPUSD movement on the last trading day of the week.
German consumer confidence edged up to 10.8 for July from 10.6 previously, maintaining strong confidence in the economic outlook. Eurozone money supply growth remained at 5.0% for June with no implications for monetary policy and there were no significant remarks from European Central Bank officials during the day. The Euro drifted lower ahead of the US open and a break back below the 1.1710 area triggered further selling interest.
Data To Watch:
6:45am EUR Consumer Price Index (EU norm) (YoY) (Jul)
9:00am EUR Services Sentiment (Jul), Business Climate (Jul), Economic Sentiment Indicator (Jul), Industrial Confidence (Jul)
12:00pm EUR Consumer Price Index (YoY) (Jul)
12:30pm USD Gross Domestic Product Annualized (Q2), Gross Domestic Product Price Index (Q2), Personal Consumption Expenditures Prices (QoQ) (Q2), Core Personal Consumption Expenditures (QoQ) (Q2)
5:00pm USD Baker Hughes US Oil Rig Count
5:20pm USD FOMC Member Kashkari Speech