25th June 2018 Market Update
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?? GBP – The upbeat outlook for interest rates from the Bank of England meeting on Thursday spilled over into Friday morning last week as the pound climbed higher against the dollar in early trading, though short-lived as much of these gains were reversed by the end of the day. The pound didn’t fare so well against the euro as it saw steady losses throughout the day.
With no data due out today, the latest EU Summit on June 28-29 and discussions regarding Brexit are likely to dominate proceedings, along with ongoing discussions over immigration and trade wars.
?? EUR – Eurozone PMI’s showed a decent reading on Friday morning, with the manufacturing and services remaining in expansion territory and the data beating expectations for the zone, suggesting that Q2 activity has rebounded. Though the market did note the slip in German and French manufacturing figures.
German business climate data is due out this morning, with a drop expected in the business climate, which could see the euro pressured.
?? USD – Preliminary manufacturing and services PMI figures were mixed on Friday, with a slowing in manufacturing and a slight uptick in the services figure recorded. The dollar gained slightly in the afternoon as a result.
Markets are more focused on the continuation of the US trade wars, as US President Tweeted “if [EU trade tariffs] are not soon broken down and removed, we will be placing a 20% Tariff on all of their cars coming into the U.S. Build them here!” This was in response to the EU’s decision to hit the US with tariffs on $3B worth of US goods, which specifically targeted industries associated with Trump’s base such as bourbon, oranges, and motorcycles in an effort to put political pressure on the President. The next scheduled date for the trade disputes is 30 June, where the US government is set to announce plans for restricting Chinese investments.
09:00am: German IFO Business Climate expected at 101.7 from previous 102.2
15:00pm: New Home Sales expected at 0.666M from previous 0.662M
Summary: The pound remained well supported into Friday morning but soon started to fall back after the more hawkish Bank of England voting on the next interest rate hike. Brexit talks this week will be the main focus as will any progression in the US trade wars.
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