UK will have second female PM
Sterling volatility continued yesterday with a surprise resurgence to above 1.3000 against the Dollar with no obvious catalyst. UK’s Industrial/Manufacturing Production results printed above consensus, but they still weren’t positive (-0.5%), while the NIESR GDP Estimate has ticked higher to 0.6% from 0.5%. The rebound did not last too long, however, and GBPUSD failed to maintain these levels following strong US data.
On the political front, Michael Gove was eliminated from the Conservative Party leadership contest and the battle will be between Theresa May and Andrea Leadsom. The new Prime Minister will be selected by a postal vote of all members of the Conservative party. The results will be revealed on September 9th.
The only data due from the UK today is the Goods Trade Balance.
The Dollar saw a day of slight gains yesterday following a string of supportive US employment data yesterday. US private sector employment increased by 172,000, according to ADP data, beating expectations of 159,000. Separate data showed initial jobless claims unexpectedly fell to 254,000 last week. This could be confirmed today as the Bureau of Labour Statistics will release their data at 1:30pm.
The Euro weakened versus the Pound during yesterday’s volatile European trading session. German industrial production printed below expectations with a 1.3% decline for May. The European Central Bank (ECB) monetary policy meeting minutes revealed unease caused by the risk of contagion and economic shock caused by the Brexit. There was a particular focus on international financial systems amid continued stresses within the Italian banking sector.
Poor European data has continued into this morning as German trade imports, exports and trade balance for May all missed expectations which will put further pressure on the single currency.
Data to watch: 6am EUR German imports, 6am EUR German exports, 6am EUR German Trade balance, 8.30am GBP trade balance – non EU, 8.30am GBP goods trade balance, 8.30am GBP total trade balance, 12.30pm US unemployment rate, 12.30pm US Non-farm Payrolls, 12.30pm US average weekly hours.