Good morning,

GBP: Parliament’s back

It has been 11 days since parliament sat and sterling has been glad for the quiet that a lack of Brexit histrionics has provided. Unfortunately, it is all set to start up again with the cross-party talks between the government and Labour recommencing as well as each party gearing up for the European elections.

Cabinet will meet at 11am today but it is a meeting of Tory backbench MPs that is said to try to change the rules on how soon the party can have another no-confidence vote in the Prime Minister that is gaining the most attention. Under the current rules, the PM cannot be challenged again until December 12th – 12 months after the last vote – with her enemies looking to cut that period of grace to six months.

GBPUSD is below the 1.30 level this morning, as much a product of a strong USD as it is a weak pound and will continue to take its cues from headlines that could hit the newswires and sterling at any point.

USD: Tech a bow

We’re back to thinking about earnings from some of the world’s largest companies and their impact on the US dollar. Amazon, Twitter, Facebook, Microsoft, Intel as well as Boeing, Ford, Chevron, Tesla and Visa all report their latest round of earnings in the coming days and there is nothing more important for overall sentiment this week.

US/GDP this Friday is the main, structured economic data point and strong growth here alongside a decent earnings picture should be enough to keep the greenback range bound and allow riskier emerging market currencies to move higher.

Today’s new home sales data is unlikely to move the needle that much with traders more focused on earnings numbers.

EUR: Fumbling again

Thursday’s preliminary look at sentiment data from the Eurozone’s manufacturing and services data was once again disappointing and stamped all over the emerging narrative that the euro was set to rebound strongly. We think that some of that narrative still exists but it is crucial that the next few data announcements go in the euro’s favour or we expect to see strong selling of the single currency once again emerge, especially if Brexit risks pick up in Brussels and London.

Tomorrow’s German IFO survey of business sentiment may be enough to arrest the negativity but Thursday’s consumer confidence numbers will also be closely watched.

Have a great day.