The first day of trade in this fresh week saw the pound fall against its peers. €1.12 has finally given way while sterling slowly works its way toward the important $1.25 mark against the buck.
The scene continues to remain unattractive for the beleaguered currency. The economy is slowing, Brexit is on hold (not in a good way!), we’re still awaiting a new prime minister to be appointed and just as things feel like they could not get any worse – overnight Chancellor Hammond has threatened to resign over Theresa May’s proposed education spending plans. The departing PM would like to leave a legacy behind and has honed in on a 3 year plan for investment into education, totalling c.£27 billion. Unfortunately for May, Hammond plans to maintain a war chest in the case of a no-deal Brexit. This current disagreement has led the Chancellor to threaten his resignation.
Today is an active one on the economic calendar. We’ll have a number of central bank speakers across the session, including the likes of Mark Carney and Mario Draghi. Additionally a substantial amount of eurozone data will be on tap. German inflation and ZEW economic sentiment index as well as eurozone composite inflation and trade balance. From across the pond we’ll observe US building permits and housing starts and from our Canadian friends we’ll monitor manufacturing sales numbers. Domestically, the race for the next PM continues, today hosts another voting round with Rory Stewart now 2nd favourite in the bookie’s eyes to take the number 1 spot. We could see a reaction in GBP depending upon the voting outcome today so sterling exposed clients be aware.
Written by Viv Savani. 8:50am, June 18th 2019
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