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Can he, Carney?

Can he, Carney?

Sterling saw the end of its recovery yesterday as both GBPUSD and GBPEUR ended down at the close of the European trading session. There was some positivity early in the day, as GBPUSD pushed above 1.3500 following Boris Johnson’s announcement that he will not be standing for UK Prime Minister. This leaves Michael Gove and Theresa May in a two horse leadership race for the Conservative party.

Sterling’s early gains were not maintained, however. The biggest tumble came following Mark Carney’s speech at 4pm. He said that the economic outlook has deteriorated, meaning some monetary policy easing from the Bank of England (BoE) will be required over the summer. This pushed GBPUSD down below the 1.3250 threshold, causing the Pound to lose over 2 cents vs the Dollar.

Today, Manufacturing PMI data will be released from the UK. This is the first piece of data that includes June, and it will give insight into the immediate impacts of the UK’s vote to leave the EU. Along with this, expect most eyes in the UK to be on the Conservative party’s leadership race.

The Dollar posted gains yesterday against the Euro and the Pound as Mark Carney’s comments crippled the British currency and intensified the negative sentiment around the UK’s outlook following the shock referendum result.

From a data viewpoint, the US initial jobless claims rose 10k from the 258k it posted last week. The Chicago PMI came in at 56.8 for June, which eclipsed the 50.7 reading that was expected.

The Euro also benefitted from Sterling weakness yesterday. Although there was sideways trading against the Dollar, GBPEUR opens this morning below 1.2000, briefly reaching a 52-week low. This follows yesterday’s Eurozone Consumer Price Index (CPI) publishing at 0.1% – better than expected for June. This combined with Carney’s negativity to bolster the Euro.

June’s Manufacturing PMI figures and unemployment rates for the Eurozone will be released this morning.

Data to watch: 8.55am German Manufacturing PMI June. 9am EU Manufacturing PMI June. 9.30am UK Manufacturing PMI June. 10am EU Unemployment Rate May. 1.45pm US June Markit Manufacturing PMI. 2pm US ISM June Manufacturing PMI.

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