Sterling rises on retail sales result
Sterling rose yesterday as Retails sales for June came in well above expectations at 1%. The forecast was for a decline of 0.3%. The rise follows two months of declining sales. The economic data
was enough to give the Pound a boost from its 2019 lows. News
that the EU may be about to soften their stance over the Irish border agreement has also helped to buoy the Pound. The Pound may struggle to make additional gains as the chance that Britain will leave the European Union without a deal is the highest since October 2017, economists polled by Reuters say, as arch-Brexiteer Boris Johnson looks set to take over as prime minister next week.
Pound volatile on Brexit developments
Recent reports in The Times
suggest that three ministers in the UK will resign when (if?) Boris Johnson becomes UK Prime Minister. The UK Justice Minister, David Gauke, is due to resign once Theresa May finishes her final duties as PM, says the newspaper. Philip Hammond, UK Finance Minister, and Rory Stewart, International Development Minister, will apparently follow suit on Johnson’s appointment. Next week may be light on economic data, but the political issues look set to remain on centre stage.
There is very little tier 1 data today, so focus will shift to next week, when Boris Johnson is likely to be confirmed as the new UK Prime Minister. Expect a flurry of resignations and perhaps a hardening of resolve from the new PM. Beware - volatility may return as traders continue to price in the risk of a No Deal Brexit.
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New European Commission leader against Hard Brexit
The future head of the European Commission said would be open to an offer of extending Brexit talks
stating the importance of a smooth exit for the UK from the EU. She added that she didn’t want a hard Brexit as it would not be beneficial for either side. Signs that the EU economy
is continuing to stagnate could see the European Central Bank (ECB) cut interest rates in September after signalling a bias to do so this month according to economists in a Reuters poll, who do not expect a turnaround in the Eurozone
’s economic fortunes any time soon.