With no UK economic data and Mark Carney stating rate hikes were still on the table, the Pound rose before settling much where it started. Broad-based US Dollar weakness based on expectations of future interest rate cuts, and the European Central Bank (ECB) policy meeting being more positive than forecast allowed Sterling to claw back some ground. The lack of negative UK political and Brexit headlines removed the usual downward pressure. Today is Theresa May’s last day as Conservative leader but will remain as Prime Minister until the new leader is announced on July 22nd. Brexit has taken a back seat for now but we expect volatility to return in the next week.

Halifax house price data showed a rise of 0.5% for May and 5.2% on an annualised basis, broadly indicating stability in the market. With no other UK data, the Pound will again be influenced by global trading patterns. Sterling opens at 1.1279 on the Euro, and 1.2700 on the Dollar.


The greenback was under heavy selling pressure yesterday as the North American market opened, mainly due to the ECB monetary policy statement. Reports that the US may delay the tariffs on Mexican goods extended the four-day rally on US equities, however, Vice President Mike Pence later denied the news.

Fresh data showed unit labour costs in the non-farm business sector decreased by 1.6%. The four-quarter rate is now at its lowest since 2013. After Powell’s recent dovish comments, the market is now pricing in a shift in monetary policy with an imminent rate cut on the cards. US non-farm payrolls data are due later today but the market focus will be on Average Hourly Earnings.


As expected the ECB kept interest rates unchanged, but ECB President Mario Draghi surprised with an optimistic tone in his press conference. Draghi believes that despite ongoing global trade tensions and Brexit uncertainty the recent economic data isn’t bad and that there’s a low probability of a recession. The Euro gained 0.6% on the Dollar on a combination of positivity and Dollar weakness but failed to break through 1.1300. No Euro data is due today, so all eyes will be on the US data.

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