PM to offer tax incentives for innovation
Sterling stumbled against the Euro last Friday, falling 1.1% from a mid-morning peak of 1.1724 to 1.1593 by 1pm, before recovering to 1.1646. GBPUSD showed much the same story, falling from 1.2430 to 1.2304 by the end of the day.
Theresa May is set to unveil an extra £2Bn a year of funding for scientific research and development in a speech to the Confederation of British Industry today. With just two days to go until Stephen Hammond unveils his first Autumn Statement, the Prime Minister is also expected to reveal plans to have the lowest corporate tax rate in the G20. With no economic data until Friday, the first post-referendum economic projections will be provided by the Office for Budget Responsibility (OBR).
French ex-President Nicolas Sarkozy has been knocked out of the running for presidential candidate of the centre-right Republican party. Admitting defeat, Mr Sarkozy endorsed Francois Fillon to defeat current poll leader National Front president Marine Le Pen in April’s general election.
Furthermore, Germany’s centre-right Chancellor Angela Merkel has announced that she will run for a fourth term in office. She said that she expected her toughest campaign to date, and vowed to “fight for our values and our way of life”. Speeches by the European Central Bank’s (ECB) President M. Draghi and board members B. Coeure and D. Nouy could be worthy of attention later in the day.
On Friday versus the Euro, the Dollar hit twelve-month highs reaching the 1.0582 mark. Sterling however did see sharp volatility during the afternoon on Friday, as the Dollar jumped nearly one percent. President-elect Trump is interviewing top investment executives for his Treasury Secretary role as he attempts to assemble the cabinet that will operate the White House in January. Trump has more meetings scheduled this week, thus the applied pressure on the Dollar is all dependent on the outcomes of these meetings.
Data to watch: 1.30pm US Chicago Fed National Activity Index (Oct). 4pm EUR Draghi speech.