21st June 2017 Market Update
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?? GBP – Sterling lost ground across the board yesterday after Mark Carney’s speech, falling to the lowest level against the US Dollar since mid April and one week low against the euro. This came after his opinion that now is not the time to raise interest rates. This is a surprise after three members of the Bank of England Committee voted to raise interest rates last week.
Today we have the Queen’s Speech, which will set out the government’s legislative programme for the next two years. Although the DUP are expected to back May, the market generally expects them not to be taken for granted.
?? EUR – The euro took advantage of Sterling weakness gaining over half a percent. With a week of no red flag data for the euro, the Brexit negotiations started yesterday with an agreement between Brexit secretary David Davis and European Commission’s chief negotiator Michel Barnier that they would meet every four weeks over the course of the next 2 years. The main goal over the upcoming months is to secure a deal over border control for British and European citizens, which could see more volatile rates.
?? USD – The only data out for the dollar today is the crude oil inventories, which usually does not affect the rate. The data strengthened prior to Stanley Fischer’s speech at 8:15am, however there was no real financial data that is relevant to the foreign exchange market. Robert Kaplan had a report last night at about 8:00pm which didn’t really affect the market.
10:00pm – RBNZ Rate Statement.
10:00pm – Official Cash Rate.
3.30pm – Crude Oil Inventories.
Our View: Following Mark Carney’s speech yesterday, Sterling lost ground against the euro and dollar. With no stand out data across the board the pound should keep this loss throughout the rest of the week. Following the Conservative’s attempt to secure a deal with the DUP and leading to more uncertainty with Brexit talks, EUR/GBP will stay volatile.
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