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Sterling drops on Trump’s warning

Published: Friday 13 July 2018

  • USD held back by drop in inflationary pressures
  • Quiet day for hard data
​​By David Johnson

Sterling slipped again late yesterday when the US president said the Brexit deal, released by the UK Prime Minister would damage trade between the UK and US. That added weight to the arguments being deafeningly espoused by Theresa May’s critics within and without her party. I suspect this story will dominate the next few days but that isn’t much of a forecast is it.
To be fair though, other than a speech by Bank of England (BoE) member Sir Jon Cunliffe today, there really isn’t a lot for UK traders to concentrate on. Next week is much more lively with UK employment, inflation and retail sales data coming at us thick and fast.
There is though a reasonable amount of US data to get our teeth into. Deep breath, trade figures import and export, The University of Michigan consumer sentiment index and speeches from two Federal Reserve members. Whilst that racks up to a significant number of events, the impact on the USD is likely to be a little lacklustre. The US Dollar was a tad weaker after US consumer inflation for June was below expectations and the price of new houses stalled in May. That seriously weakens the arguments for interest rate hikes in the US.
Other than these few morsels, this is a quiet day for hard data but the politics, trade disagreements and, well practically anything the US president says, have the potential to shift exchange rates unexpectedly. So complacency is not an option right now.
And I had to read and re-read this story to be sure I wasn’t missing something but the Build-a-Bear store in Leeds had a queue a mile long because of a promotion in which parents could pay a Pound for each year of their child’s life for their teddy bear.  People actually queued for 9 hours to get a teddy bear at a reduced price. NINE HOURS! I can’t help feeling nine hours spend playing with their kids would be more valuable than any teddy.
What time do you call this?

The angry wife met her husband at the door.
There was alcohol on his breath and lipstick on his collar.
“I assume,” she snarled, “that there is a very good reason for you to come waltzing in here looking like that at six o’clock in the morning!”
“There is,” he replied. “Breakfast.”

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR All Day Economic and Financial Affairs Council    
USD 13:30 US: Import Prices 0.6% 0.1%
USD 15:00 US: Preliminary Consumer Sentiment 98.2 98.1
USD 16:00 Federal Reserce Monetary Policy     

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