Good morning,

GBP: How many battles can May flight?

Thank god sterling does not trade on the impact of football results, you could argue that it should have traded a lot lower in the past had it done so. With the World Cup over, it is only a Brexit and its travails that we have to look forward to.

The Westminster village is still arguing with itself following Monday’s resignations with Brexit backing Conservative MPs now planning on being as awkward as possible and adding additional roadblocks on everything that this Conservative government wants to do.

There’s been a lot of chatter over a leadership challenge in the past couple of days but I really don’t think they have the votes and hence this line of attack, one assumes. The first thing in their sights will be today’s white paper on trade with the EU.

For now it looks like amendments to next weeks Customs and Trade bills will be asked for and voted upon with Jacob Rees-Mogg et al, maybe armed with the DUP possibly voting against the government along with Labour, SNP, Lib Dems and Greens.

Therefore such is May’s lack of power following last year’s general election, nothing really gets going. So – like a fair few groups in Parliament – the Brexiteers have veto power, but no power to push their own dreams into reality.

I’m not sure how this resolves but obviously we’re on a ticking clock given we need to have deals agreed by November at the latest. We’re getting to a point that splits within Labour and the Conservatives could see nothing done.

Sterling has been held up on data, not on politics, and there are few data points out there that can rescue a currency from a political situation as interminable as we could find ourselves in soon.

CNH: Fresh weakness

The Chinese currency was taken out for a bit of a beating yesterday as the sentiment around trade disputes with the US worsened. USDCNH loosened by as much as 1.1% through the Asian session and could easily have further to go as the Trump administration ratchets up the pressure.

The next iteration of all of these trade concerns very much remains subject to whether you believe that a trade war can turn into a currency war that sees additional intervention by governments and central banks to protect their currencies and economies.

So far, China and other Asian currencies – Korea, Thailand, Malaysia – have veered away from such a policy but a continued fear that they could should keep the dollar well supported by investors.

Have a great day.