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June 2017

GBP bounces on Prime Minister’s comments

Published: Monday 26 June 2017

  • GBP bounces on Prime Minister’s comments
  • US data likely to support USD
By David Johnson
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Well that was a weekend of controversy. The BBC coverage of Glastonbury was sponsored by a certain J Corbyn who will - according to J Corbyn - be Prime Minister in 6 months. John McDonnell claimed the victims of the Grenfell Tower fire were “murdered by political decisions”, Vettel rammed Hamilton and an AirAsia flight from Perth to Kuala Lumpur had to turn back after an engine started vibrating the plane like a washing machine on spin mode. The pilot then told the passengers to ‘pray for survival’. That’s not a call you want to hear from a pilot is it.
 
The financial markets were a little calmer but there is a lot going on. The seemingly endless stream of views over Brexit is not adding any real knowledge at this stage. Negotiations are at the preliminary level and firm facts are as rare as well dressed rappers. That doesn’t stop the speculation and it is just that speculation that is moving Sterling around. The Pound has bounced a little on Theresa May’s announcement that she was in favour of EU residents with 5 years of residency in the UK being granted the right to stay as long as the EU does likewise with the million or so UK citizens in the EU. Does that mean the EU will owe the UK for supporting those on benefits then? It’s worth asking isn’t it.
 
Whilst today is quiet on the UK front, the week brings the vote on the Queen’s speech in Parliament; something J Corbyn said he would vote against. That’ll be interesting. We will also get retail sector data, mortgage figures, consumer confidence, and the final economic growth data for Q1. All could be market moving and the emphasis on the consumer data will put the Bank of England’s mixed messages into context.
 
Eurozone data is also a bit sparse this week but we will get German business confidence data and Eurozone inflation to ponder. The Euro itself is sitting in doldrums territory in the meantime.
 
US data is a little more plentiful. The final Q1 GDP data will be the highlight but personal income and expenditure figures are always interesting numbers for the Federal Reserve; especially after their recent interest rate hike. There are always enough Fed speakers to hear as well, so we won’t be short of comment.
 
This week also brings the New Zealand Trade Balance and the NZ business confidence index. The Kiwi Dollar has been a little stronger of late, much to the chagrin of the Reserve Bank of New Zealand. A weaker currency would be very helpful for exports but they are not in a position to cut their base rate to make that happen. They need to see improvement elsewhere to weaken their currency. They may be waiting some time for that.
 
We will also see Canadian growth data on Friday. That is forecast to be rather upbeat, so CAD buyers may seek to mitigate the risk of a stronger Canadian Dollar by trading earlier in the week.
 
Have a great week as we walk out of June and the 2nd quarter of the year and the first half of the year. That tends to bring volatility as traders settle up their positions, so be aware of the potential and manage the risk. Call if you would like some pointers on that. 
 

Joke

 
A 75 year old marries his 5th wife. She is 28 years old and stunningly beautiful.
“Hey Richard,” said his friend, “You old dog you. This is the 5th beautiful wife you have married. How have you managed that?”
“I just change my name,” said Richard. “When I introduce myself, I say, ‘Hello, I’m Rich.”

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news
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