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We Have Lift Off For Sterling

19th July 2019 Market Update

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🇬🇧 GBP –  Sterling rebounded yesterday after strong Retail Sales provided some optimism for the UK economy. Expectations were for an improvement but for the figure to remain negative. However, the June results were strong; recording a 1% improvement. In Westminster, MPs backed a bid to prevent the new prime minister suspending Parliament to achieve a no deal Brexit by the back door. 17 Tory MPs rebelled with other prominent figures in Cabinet abstaining and gives an insight into how difficult the new Prime Minister’s task will be. Markets took the action positively and enabled the Pound to climb away from the multi year lows seen earlier in the week, continuing through Asian trading hours.

Today is very quiet on the data calendar for the UK and so Brexit will continue to dominate the rate movements for the end of week. Markets will be looking for how the candidates react to the developments in Parliament and how the new leader approaches their first days in office.

🇪🇺 EUR – There was a lack of data from the Eurozone yesterday which left the single currency vulnerable to Sterling’s bounceback but was broadly level against the US Dollar.
Today is also light on economic news and so expect a quiet end to the week for the Euro.

🇺🇸 USD –  The US Dollar slipped for the second consecutive day as attention moves to the Fed meeting next week and the anticipated interest rate cut. Jobless Claims and the Philly Fed Manufacturing Survey both produced positive readings, but the market overlooked these. Currency manipulation was back in the headlines as US Treasury Secretary Mnuchin said at the G7 meeting there was “no change” to Washington’s stance on the US Dollar “for now” which hardly quashed concerns of intervention from the Trump administration.
Today only features the Michigan Consumer Sentiment Index which is expected to improve but could also be disregarded ahead of the interest rate decision. Bullard will speak in the afternoon, but he is unlikely to provide fresh guidance to avoid jumping the gun ahead of Wednesday’s meeting.

 

Summary:

GBP: Sterling gains as MPs try to prevent a no deal Brexit
EUR: No news creates a quiet end to the week
USD: Greenback weakens ahead of interest rate decision next week


 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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