It was a busy day in London yesterday as Boris Johnson began his term as Prime Minister, which saw Chancellor Philip Hammond and Foreign Secretary Jeremy Hunt resign alongside other high profile exits from cabinet. Dominic Raab and Priti Patel returned as foreign secretary and home secretary as the new Prime Minister reconstructed government.
It was a positive day for the pound yesterday as GBPEUR hit a July high of 1.1216, following weaker than expected EUR PMIs. Later in the afternoon, GBPUSD steadied above 1.25 after Johnson promised in his opening speech that the UK would be leaving the EU by 31st October with “no ifs or buts”.
It was also a fairly busy day for economic data releases, with the US manufacturing PMI slump and German manufacturing PMI slowdown being the noteworthy stories. We saw a near-decade low in the US as the market’s expectations of a 51 reading were missed and came in below at 50, whilst in Germany, the reading came in at 43.1, which was lower than the 45.2 expectation.
EURUSD hit a two month low yesterday following the unexpected falls in manufacturing PMI readings and could see a volatile day today as attention turns to the ECB and Mario Draghi. The ECB rate decision will be announced at 12:45 GMT today with no change in rates expected, as it looks more likely there will be a cut in September. Draghi will speak following the decision at 1:30 and could impact the Euro further with any mention of monetary policy easing.
It was a relatively quiet day for the dollar away from the US PMI readings, as USD traded lower against a number of currencies after three consecutive days of gains. This afternoon we have June readings for USD durable goods and USD advanced goods trade balance and then all eyes will be on the monetary policy meeting at the Federal Reserve next week.
With 98 days to go until 31st October and the UK’s imminent exit from the EU, anyone feeling unsure about their GBP exposure, looking for support on navigating through the upcoming turbulent weeks should reach out to your account manager to discuss their options on 0207 326 9120.
Have a fantastic day.