20th June 2017 Market Update
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?? GBP – Sterling trading within the ranges with no real movement after day one of Brexit negotiations. Bank of England committee member Forbes believes CPI will probably rise above the 3% level and expects wage growth should pick up through the year, however her dissent and comments do not carry as much weight, as she leaves at the end of the month. Professor Silvana Tenreyo has been appointed as her successor by the BoE and will act as an external member. She is currently an economics professor at the London School of Economics.
Mark Carney has been speaking this morning and stated that it isn’t the right time to raise interest rates before we know how the Brexit negotiations pan out. He also cited the weak consumer spending, subdued inflation and “anaemic” wage growth as reasons not make any changes yet. As a result, the pound has slipped to week lows across the board.
?? EUR – All eyes on the opening day of Brexit negotiations with Theresa May more than likely having to soften her stance, as she does not have the total control she was hoping for after the elections. No real data that could impact the markets came out yesterday and today is pretty much the same, besides the German PPI (m/m) which has no effect on the currency markets.This is forecast to come out at – 0.1 with the previous reading at 0.4%.
Away from the UK, the Eurozone continues to show signs of health, the economy has improved markedly over the last few months and a number of issues are now starting to come to a conclusion. Brussels has approved bailouts for two struggling Italian lenders, this had the ability to be the ‘crisis of the summer’. The favourite to pick up this accolade now seems to be the UK and all will be revealed over the coming months.
?? USD – No data coming out of the US today but FOMC member Dudley struck a very similar tone to Yellen, if not more confident. He believes that the inflation levels and unemployment levels are at a pretty good place to be and that confidence levels are very high at the moment with the growth well distributed throughout the economy. Dudley feels that wage growth will quicken as the job market tightens even further.
?? GBP – 08:30am – Mark Carney speaking at Mansion House.
?? USD – 20:00pm – FOMC members Fischer and Kaplan will be speaking.
Our View: Due to lack of any significant data in the UK, EU and across the pond we could see the pound slow to recoup the losses seen first thing this morning.
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