- Sterling slips marginally on UK politics
- UK Gross Domestic Product (GDP) to guide Sterling
By David Johnson
All change in the cabinet then. Boris resigns and Raab comes into the Foreign Office whilst the knives are out for Prime Minister May and the Brexit deal looks softer than a cotton wool kitten. The rebels in the conservative party don’t think they have enough support for a ‘vote of no confidence’ in the Prime Minister and maybe that is why Sterling seems to have taken most of this in its stride.
The Pound is half a cent lower against the Euro and a cent lower against the USD but that is entirely within its recent ranges. The lack of UK data yesterday probably has a lot to do with that. The British Retail Consortium released data overnight that showed 1.1% growth in like for like high street sales. That is sharply lower than the May data but still in positive territory. This morning most likely brings a similar pattern in UK construction output but industrial output looks set to be a little stronger. We will also see a GDP release from National Institute of Economic and Social Research (NIESR). That is expected to be in line with the previous month’s data at a quarterly 0.2% growth rate. Sterling will still be susceptible to political fallout but this data, if in line with the forecasts, will steady the Pound.
Eurozone data today is a little more scattered. We have already seen poor French industrial production data and the markets are awaiting the ZEW Institute’s Eurozone economic expectation survey results. The forecasts are not good and that could put pressure on the Euro.
We heard overnight that Australian business confidence was softer in June when the markets were expecting a gain. That weakened the Australian Dollar a little.
This afternoon brings job opportunity data for the US plus the Federal Reserve’s Red Book. That is a retail sales monitor of around 9,000 stores across the US, so a decent indicator of consumer sentiment that the Federal Reserve watches closely. The USD may react.
This afternoon also brings Canadian housing market data and, with a potential interest rate hike this week from the Bank of Canada, that will take on extra significance.
Oh and if you thought your friends and family were taking the World Cup seriously, there are reports from Russia that a couple are getting divorced after they fell out over who is the better footballer, Ronaldo or Messi. At the risk of exacerbating things, might I offer the name Kane? I guess that’s not helpful at this time.