30th July 2018 Market Update
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?? GBP – In the absence of any economic data releases on Friday, the markets focused again on the ongoing saga that is Brexit. Prime Minister Theresa May’s efforts to bypass Brussels and deal directly with EU nations seemed to have been hampered as the risk of a no deal Brexit has intensified after the PM was warned that the European Parliament would veto her Chequers deal unless there was a new plan for the Irish border. Austrian Chancellor Sebastian Kurz, however remains optimistic about negotiations and in his meeting with the PM on Friday said it was important to avoid a hard or disorderly Brexit.
Today, we have mortgage approvals due out this morning, which are expected to show an improvement, though unlikely to have any influence on the pound. Brexit talks will lead the way ahead of the BoE interest rate decision on Thursday.
?? EUR – A very quiet day for the euro in terms of news on Friday, with the markets digesting the ECB news from the prior day, the euro remained fairly rangebound, but we did see some movement late in the day against the pound, as the pound fell against the euro.
Today, again very light on data with business climate surveys due early in the day and German inflation figures later in the day. If German inflation does show a sharp pickup we could see this help the euro.
?? USD – Growth in the US hit 4.1% on Friday, very much in line with expectations though this is the first time since 2014 that the 4% has been breached. The dollar found support following the reading, but this was perhaps subdued a little as personal consumption figures, which are used to help measure inflation, missed expectations and show a slowdown in inflation in the US. On Sunday, US President threatened a government shutdown if Democrats didn’t fund his border wall and back immigration law changes, as part of his hard-line policy.
Today, we have no data releases of note from the US.
09:30am: Mortgage Approvals (Jun) expected at 65.5k from previous 64.526k
10:00am: Business Climate (Jul) expected at 1.35 from 1.39
13:00pm: German Harmonised Index of Consumer Prices expected flat at 2.1%
Summary: US GDP for Q2 hit over 4% for the first time since 2014 on Friday, largely in line with expectations following a modest reading in the first few months of the year. This will undoubtedly be championed by President Trump as being rewards for his stellar work with the US economy.
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