Fresh lows for Sterling amidst Brexit uncertainty
10 July, 2019
Yesterday’s trading saw further pressure on the pound as Brexit uncertainty and a slowdown in growth keeps investors away. GBP/EUR rates hit a new 6 month low, continuing the downward trend of the last couple months, all be it at a slower pace in recent weeks. GBP/USD also touched on the same low point not seen since April 2017, following a few better days for the greenback after stronger US job figures on Friday. These movements have been driven largely driven by the current sentiment and technical trend, but the weakness in the pound was no doubt aided when a proposed parliament amendment to stop ‘no deal’ was not even selected to be voted on by MP’s. Dominic Grieve sought to amend the Northern Ireland Bill to stop the new PM from being able to force through a no-deal by shutting down and blocking out parliament. With no legal protection in place currently, this scenario remains a possibility on October 31st if the new PM wishes to, and we all know Boris Johnson’s stance on this matter if it is he to be confirmed as PM on 23rd July.
The day ahead will kick off with some eco-stats for the UK, starting with Manufacturing and Industrial production figures at 9:30am. Last month these figures all showed a worrying contraction, however analysts are more optimistic of a return to growth in the latest readings which could lead to some much needed recovery in exchange rates if confirmed. At the same time there will also be a GDP reading for the month of May, with an expected growth of 0.3%. Many analysts however are less optimistic over this figure with the Bank of England recently projecting an overall growth in Q2 of zero. This afternoon the focus switches over to the Loonie with the latest interest decision from Canada (no changes expected). Finally tonight at 7pm we have release of the FOMC minutes in the US, which may give further indications towards the likelihood of a rate cut later this month which is currently very much expected by the markets.
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