David Cameron flies into the EU storm today as European leaders look to turn on the heat with the post-Brexit fallout. Europe’s most power leader, Angela Merkel stated that "we will ensure that negotiations won't be conducted according to the principle of cherry picking." And, Merkel emphasized that "those wanting to leave the family can't expect all obligations to become obsolete while privileges would continue, to exit." She stated that the UK could enjoy access to the single market only if it accepted the “four basic European freedoms – that of people, goods, services and capital”. The European Parliament has called for the UK to trigger Article 50 "as soon as possible".
On the data front, US &P Case-Shiller 20 cities house price rose 5.4% in April and GDP growth was revised higher to 1.1%. However, markets are still overlooking significant data and looking towards Brexit comments and actions.
In the afternoon, we also saw FTSE trading up 2.8%, along with Sterling leading commodity currencies higher. In general sentiments remain very cautious. There are speculations that BoE could cut interest rate when they meet on July 14th.
President Mario Draghi stressed that central banks should think about whether their policies are “properly aligned” with those of their peers. He warned that currency devaluations aimed at boosting competitiveness is a lose-lose for the global economy. His comments suggest a definite shift in thinking; that the ECB is concerned about those global factors driving inflation that they cannot directly influence.
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