Pound’s Brexit Woes
The Pound is resting just above 1.2700, as GBP-USD continues to lift from the week’s low of 1.2660. Brexit concerns loom over all other issues for the UK, and constant failure to resolve a hard Brexit scenario could see confidence in the GBP evaporate once again.
Retail Sales came in better than expected yesterday at 3.5% for the year into June, however, inflation saw the UK’s CPI barely claw its way to the market’s forecast of 2.5%. The positive showing from Retail Sales has seen limited positivity around Sterling.
Sterling will continue to be focused on Brexit, which sees hard-line Brexiteers in Parliament threatening to outright reject any trade deal brought by the Chequers. Essentially, this promises to sabotage Brexit preparations and force the UK into a hard Brexit, if Prime Minister Theresa May can’t secure a workable deal from European leaders when Brexit negotiations begin again this month.
The USD strengthened last night, after comments from both US President Trump and his economic council director, Larry Kudlow, that the current ‘strong Dollar’ is a sign of a confidence in the US and its economy and, notably, that a ‘steady’ Dollar is preferable.
Adding to the tone, the probability that US and China could re-start trade talks later in the month has been bolstering the better mood around the buck.
Consumer Sentiment gauged by the U-Mich index is only due across the pond.
A slight recovery in the Turkish Lira yesterday saw the Euro strengthen slightly in yesterday’s early session. However, news that the States may put more sanctions on Turkey, meant that the Euro-Dollar rate cooled from an intraday high of 1.1409 to the high 1.1300s.
Eurozone figures showed a trade surplus of EUR 22.5 billion, which was down on the same data last year. This put a slight stop on the small gains that the Euro was making in the morning. July CPI inflation is expected to be 2.1% for the headline rate and 1.1% for ‘core’ inflation.
As mentioned above, the main data today is the Eurozone CPI data at 10.00 A.M. – we can expect some volatility but the general consensus is that the figures will come in as expected. Aside from Canadian CPI figures later, the Eurozone data will be the most closely watched.
Data to watch
09:00 EUR Consumer Price Index (YoY) (Jul)
09:00 EUR Consumer Price Index – Core (YoY) (Jul)
09:00 EUR Consumer Price Index – Core (MoM) (Jul)
09:00 EUR Consumer Price Index (MoM) (Jul)
12:30 CAD Bank of Canada Consumer Price Index Core (MoM) (Jul)
12:30 CAD Bank of Canada Consumer Price Index Core (YoY) (Jul)
12:30 CAD Consumer Price Index (YoY) (Jul)
12:30 CAD Consumer Price Index – Core (MoM) (Jul)
12:30 CAD Consumer Price Index (MoM) (Jul)
14:00 USD Michigan Consumer Sentiment Index (Aug)
17:00 USD Baker Hughes US Oil Rig Count