17th July 2019 Market Update
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🇬🇧 GBP – Yesterday there was reason for early sterling optimism as average earnings came in above expectations at 3.4%. Despite this the pound was hampered yesterday as both Jeremy Hunt and Boris Johnson threatened to ditch the Irish backstop – a key component of May’s deal to stop a hard border with Ireland. As a result, sterling dropped to its lowest levels since April 2017 against the US dollar, and its lowest levels since January against the euro.
This morning CPI is expected to come in at 2.0% – the Bank of England’s target. If CPI is above expectations, then sterling could receive some much needed respite and strengthen as it reduces the chances of the Bank of England cutting interest rates in the near future.
🇪🇺 EUR – German ZEW economic sentiment came out below expectations, once again putting the German economy in the spotlight. Since the end of last year, there have been growing concerns that Germany is on the cusp of entering a recession. The ZEW economic sentiment is a reading of economic health, and any reading below 0 is a sign of pessimism. The fact it came out at -24.5 shows the economic pessimism around the German economy. Today CPI and core CPI are being released from the Eurozone. These figures are expected to be at 1.2% and 1.1% respectively.
🇺🇸 USD – Retail sales and core retail sales remained at 0.4% yesterday, exceeding market expectations. This surprised the market, as only last week Fed Chair Powell had been speaking about potentially cutting interest rates and identified his concerns about the American economy. The US dollar maintained its strength as a result. This afternoon building permits are being released.
GBP: Sterling weakens as no deal risk heightens
EUR: ZEW economic sentiment puts Germany in the spotlight
USD: Retail sales exceed market expectations
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