Good morning,
The pound tumbled lower yesterday following Mark Carney’s speech which depicted a rather bleak warning around the tariff war. Policymakers could find themselves grossly underprepared for further tensions sweeping across Mexico, China, US and the European Union. With Britain still wrestling political uncertainty and Brexit worries, the market is increasingly pricing in a year-end rate cut with odds jumping from 26% to 49%.
At 14:45 GMT we have a range of US data including factory orders, market services and a Non-manufacturing PMI survey. Given the current situation with US manufacturing, it will be interesting to see if the service sector is also feeling the squeeze. Previous survey readings have been close to the 50 mark which have worried policymakers at the FED, meaning a poor result today would fuel further expectations of an interest rate cut.
Christine Lagarde was a surprise nomination to take over from Mario Draghi as the head of the ECB. She’s remained one of the more vocal economists on driving economic stimulus and would almost certainly encourage further QE across the Eurozone.
Have a great day.