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Is Brexit coming home?

Is Brexit coming home?

GBP 
The Pound rose to 7-day high following Fridays comments from BoE Governor, Mark Carney, that he was confident an economic slowdown was temporary and that inflation was rising towards the target. However, the move was short-lived with concerns for Brexit ahead of May’s cabinet meeting on Friday.

GBP firmed late Friday on news that UK Prime Minister (PM) May had prevailed in gaining her government’s cabinet approval for a Brexit negotiating plan at the much-watched gathering at Chequers, the official country residence of the PM. As it stands the accord on the “soft Brexit” strategy agreed at the end of last week was seen as a positive development, albeit with plenty of compromises and uncertainty over how the EU responds. The path ahead is complicated, with May set to present her plans to the 1922 committee of senior Tories today and the “White Paper” on Thursday. Against this background markets will wait and see whether other key resignations follow.

The pound has been hesitant this morning however following headlines that several members of the UK parliament, including Brexit Secretary David Davis, have resigned from their posts within the parliament’s Brexit department in protest of Prime Minister Theresa May’s latest soft Brexit proposal, a plan that Davis has decried as betraying the original Brexit referendum results.

We see little on the economic calendar for the Sterling, other than ongoing Brexit discussions, with only a speech from the Bank of England’s Broadbent at 07:50 GMT.

USD

The US Dollar fell to 3-week low against the Euro on Friday with initial jobless claims rising unexpectedly and private payrolls lower than expected.

The June increase in US non-farm payrolls at 213,000 was slightly above consensus forecasts of 195,000 and May’s figure was revised higher to 244,000 from 233,000. There was a robust gain in manufacturing jobs for the month and most sectors including construction, which recorded solid gains, but the overall total was dragged lower by sharp losses in the retail sector. Unemployment increased to 4.0% from 3.8% as more people returned to the labour force with a higher participation rate while the increase in average earnings was held to 0.2% compared with expectations of 0.3%.

No data releases scheduled for today in the US docket should leave the attention to trade war headlines, while investors will also be wary on increasing political effervescence in the Old Continent.

EUR

The Euro gained against the US Dollar on strong German industrial orders as demand from domestic customers and the rest of the Eurozone picked up. Coupled with a report that some ECB members viewed end in 2019 as too late for an interest rate hike, we saw the Euro pushing to a 3-week high.

Mario Draghi, President of the European Central Bank (ECB), is scheduled to testify before the Committee on Economic and Monetary Affairs of the European Parliament about the economy, monetary policy, and virtual currencies in Brussels. EUR pairs could turn volatile during Draghi’s speech and the common currency may pick up a strong bid if the central bank chief is hawkish on interest rates.

Data wise in Euroland today, German trade surplus came in at €20.3 billion in May, matching expectations. Later in the session, ECB’s P.Praet and President M.Draghi are due to speak along with the release of the Sentix index for the current month.

05:45 CHF Unemployment Rate s.a (MoM) (Jun)
06:00 EUR Trade Balance s.a. (May)
07:50 GBP MPC Member Broadbent Speech
13:10 USD FOMC Member Kashkari Speech
19:00 USD Consumer Credit Change (May)
23:01 GBP BRC Like-For-Like Retail Sales (YoY) (Jun)

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