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Pound falls on tight Brexit vote

Published: Wednesday 18 July 2018

  • USD strengthened by Federal Reserve Chairman’s comments
  • Inflation and housing data awaited
​​By David Johnson

Sterling is looking a little battered and bruised this morning after a narrow win for the Prime Minister against the slings and arrows of outrageous fortune… or the ‘remainers’, to use the vernacular. There is a good chance this morning’s UK inflation data will be up a little on last months; something like 2.5% or 2.6% and that ought to support the Pound, but politics is still the elephant in every room of the house. Sterling is in the low end of its ranges at €1.1250 and $1.3050 or thereabouts.
EU Inflation data likely to breeze by
We will get EU inflation data today as well. It is the final calculation of the June data and a 2.0% annualised rate is very likely to be confirmed. Hence, it will breeze by with almost no discernible backwash.
US Dollar gains on economic news
The US Dollar is generally stronger across the board. Federal Reserve Chairman, Jerome Powell, testified that the US economy is doing very well overall and he cited inflation hitting 2% and mentioned the ongoing robustness of the US labour market. He also quite clearly threw his weight behind further interest rate hikes and that definitely helped the USD to strengthen. This afternoon brings some US housing market data and that should support further USD strength, assuming the forecasts are accurate. We will also get the release of the US Beige Book; a regional look at the US economy from the perspective of the Federal districts. That is always an interesting read and the USD may well react if the views aren’t quite in keeping with Mr Powell’s rosy specs view.
Australian jobs news expected overnight
That’ll complete UK trading hours, but we will get Australian employment data overnight tonight. Ten to fifteen thousand fresh jobs are expected to have been created but that is unlikely to bring the unemployment rate down below the already fantastic 5.4%. For a vast country with such sparse population, largely grouped around a few major cities, this is about as near to full employment as anyone could wish for. The GBPAUD rate is still attached to A$1.78 by a bungee cord, boinging up and down but unable to break free.
The gift that keeps on giving
And Trump is the gift from America that keeps on giving isn’t he? He either does or doesn’t see the Russians meddling in US elections, but that depends on which day you ask him. I heard a comment this morning that keeps making me giggle. It was that you kind of expect everything Trump says to end in the line, “So can I have some ice cream now, Mum?” Yup, that about sums it up.


A woman went to call her husband but discovered that the battery on her mobile phone was dead. So she asked her son, who was out shopping with her, to call his dad to see when he would be home.
The boy called and hung up and then called again and hung up and then tried for a third time but, once again he cut the call. He turned to his mum and said, each time I tried Daddy a lady answered and said he wasn’t available.
She remembered he had told her he would be at a factory for the day, so who the hell was this woman? She was furious. They went home and she spent the rest of the day waiting impatiently and angrily for her husband to return. Upon seeing him in the driveway, she rushed out and gave him a slap. And then, as she was still angry, she slapped him again. Some of the neighbours were in the street and she decided to embarrass him in front of their friends, so she called her son out of the house and spoke loudly to the growing gathering.
Having outlined the fact that her son had called three times and three times a ‘WOMAN’ had answered, she turned to her son and said, “and what did that woman say, Jamie?”.
Jamie said, "I remember it exactly. The lady said, 'The number you have dialled is not available. Please try later.'"

Today's Major Economic Releases

Market BST Data/Event Previous Expected
GBP 09:30 UK: Consumer Price Index 2.4% 2.6%
GBP 09:30 UK: Core Consumer Price Index 2.1% 2.1%
GBP 09:30 UK: Retail Price Index 3.3% 3.5%
GBP 09:30 UK: Producer Price Index Input 2.8% 0.3%
EUR 10:00 EU: Final Consumer Price Index 2.0% 2.0%
EUR 10:00 EU: Final Core Consumer Price Index 1.0% 1.0%
USD 13:30 US: Building Permits 1.30m 1.33m
USD 13:30 US: Housing Starts 1.35m 1.32m
USD 19:00 US: Beige Book    

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