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Sterling to remain under pressure over the summer.

GBP

The Pound traded 0.15% lower yesterday morning in reaction to growing fears of a no-deal Brexit. Boris Johnson re-affirmed his commitment to getting the UK out of the EU by October 31st with a "deal or no deal" pledge. 

The EU has recently clearly indicated that they are not open to discussing, nor revisiting the Withdrawal Agreement. Boris Johnson, likely the next British PM, somehow believes a new improved deal is possible despite previous failure to do so. He also signalled that the option to leave the EU on Oct 31st without any agreement is also a real possibility. With Brexit uncertainty expected to linger on, we expect the Sterling to remain under pressure over summer.

USD

The US Dollar is building on good market sentiment, buoyed by positive comments from members of the Federal Reserve (Fed) and the US Treasury Secretary. The latter signalled that the US and China are 10% away from clinching a trade deal. The most dovish of the Fed members, Bullard, believed a 50 basis point rate cut is off the charts as the economy needs only minor “insurance cut”. 

The market seems to largely ignore yesterdays announcement as new orders for manufactured durable goods fell 1.3% in May. The market's focus will be on the upcoming G20 meetings and the prospects of a trade agreement between the two largest trading partners.

EUR

Today we’ll see CPI figures for both Germany and Spain before we get France, Italy and Eurozone figures tomorrow. The expectation is for the price to hold somewhat and should that be the case, the Euro is expected to maintain some steady footing as attention will shift back to Trump & President Xi’s meeting at the G20 on Friday and Saturday. 

After hitting highs on 1.1386 yesterday, the price slowly trickled back down to 1.1351 in the early hours of this morning and barring any major surprises today. We expect the Euro to stay contained at its current levels for the time being. 

Today's data:

09:00 EUR Business Climate (Jun) 12:00 EUR Harmonized Index of Consumer Prices (YoY) (Jun) (Germany) 12:30 USD Continuing Jobless Claims (Jun 14) 12:30 USD Initial Jobless Claims (Jun 21) 12:30 USD Initial Jobless Claims 4-week average (Jun 21) 12:30 USD Gross Domestic Product Annualized (Q1) 12:30 USD Gross Domestic Product Price Index (Q1) 12:30 USD Core Personal Consumption Expenditures (QoQ) (Q1) 12:30 USD Personal Consumption Expenditures Prices (QoQ) (Q1) 14:00 USD Pending Home Sales (MoM) (May) 23:01 GBP GfK Consumer Confidence (Jun) 23:30 JPY Unemployment Rate (May) 23:30 JPY Jobs / Applicants Ratio (May) 23:50 JPY Tokyo CPI ex Fresh Food (YoY) (Jun) 23:50 JPY Tokyo Consumer Price Index (YoY) (Jun) 23:50 JPY Industrial Production (YoY) (May)

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