Yesterday proved to be an action-packed day, from poor European PMI data to Theresa May’s last PMQs and finally on to Boris’ first speech as PM outside No.10.
The morning session began with a fresh round of poor Eurozone economic numbers. The data-points reflected July purchasing manager index readings. Both France and Germany saw prints slip even lower, with German manufacturing falling further from the 50 expansion/contraction mark (43.1 vs. 45.1 expected). It’s become clear European manufacturing is entering a period of decline, something which will no doubt concern the ECB and Bank of England. The euro immediately lost ground following these releases, GBPEUR managed to surpass the €1.12 level and currently trades around this price heading into the European open.
Lunchtime saw Theresa May’s last prime minister’s questions. She was offered a very respectful and honourable departure with some of her outspoken critics praising her overwhelming sense of duty. This led on to Boris’ first speech as PM after his visit to Buckingham Palace to be confirmed by the Queen. His speech struck a positive tone, ramping up a feeling of national self-belief. The feeling did not filter into the currency markets with sterling unphased by any of Johnson’s upbeat rhetoric. More news flow should follow from the Johnson camp over the coming days as he completes the appointment of his team. GBP exposed clients be aware.
Today’s economic calendar is another interesting one – all eyes will be on Super Mario Draghi as he’s tasked with presiding over one last bout of economic uncertainty before he ends his tenure later this year. Many participants will be looking for clues on the European Central Bank’s next policy move, and if that move potentially arrives as early as today (small chance). The central bank will be lowering interest rates at some stage to fight-off the threat of a sharper slowdown. With Eurozone rates already at 0% the bank will be entering negative territory joining the likes of Japan and Switzerland. As usual, the policy announcement is at 1245 with the press conference commencing at 1330.
Written by Viv Savani. 9:31am, July 25th 2019
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