10th July 2018-Sterling was subjected to very volatile trading and eventually registered sharp losses

 

     

Sterling was subjected to very volatile trading and eventually registered sharp losses

Sterling was subjected to very volatile trading and eventually registered sharp losses after the resignation of Foreign Secretary Johnson increased fears over a government collapse.

Overall global risk conditions held firm amid an immediate easing of trade fears. Most equity markets made net gains and oil also held firm, although caution surrounding China persisted.

US and Euro-zone bond yields edged higher as defensive demand faded, although ranges were relatively narrow.

The dollar gradually recovered from initial losses as yield spreads provided net currency support and Euro momentum faded.

Sterling dipped lower in early Europe with a GBP/USD dip below 1.3300 amid concerns surrounding renewed political instability. Out-going Brexit Secretary Davis stated that he would not mount a leadership challenge against Prime Minister May which offered some relief and Sterling strengthened into the US open after the appointment of Raab to replace Davis.

The resignation of Foreign Secretary Johnson triggered another sharp Sterling move lower, especially with concerns that May’s position was even more precarious. There was increased speculation over a leadership challenge, especially with rumours that there were enough Conservative Party members to force a confidence vote in May as party leader.

GBP/USD declined sharply to lows around 1.3220 while GBP/EUR held at support around 1.1250. There was a limited recovery as key party officials stated that they did not expect a leadership challenge at this stage.

Speculative, Sterling shorts increased to 10-month highs according to CFTC data, limiting the scope for further selling. Barclaycard reported a 5.1% annual increase in consumer spending, unchanged from May. Political events continued to dominate with GBP/USD below 1.3250 amid concerns that political uncertainty would also damage the economy with GBP/EUR close to 1.1250.

     
 
       
 

GBP/EUR 

– 1.1270

 
 

GBP/USD

– 1.3230

 
 

GBP/CHF 

– 1.3135

 
 

GBP/JPY 

– 147.08

 
 

GBP/AUD 

– 1.7740

 
 

GBP/NZD 

– 1.9344

 
 

GBPCAD

– 1.7372

 
 

GBP/ZAR 

– 17.7518

 
 

GBP/NOK 

– 10.6155

 
 

GBP/SEK 

– 11.5406

 
 

EUR/USD 

– 1.1738

 
       
  All rates are indicative of interbank rates*  
       
 
 

GBP/EUR

 
 

GBP/USD 

 
 

EUR/USD 

 
       
 
   

09:30 GBP

UK Industrial Production (Y/Y)

2.70%

1.80%

 
   

09:30 GBP

GBP Manufacturing Production (M/M)

0.30%

-1.40%

 
   

10:00 EUR

German ZEW Survey (Economic Sentiment)(M/M)

-18.2

-16.1

 
   

13:00 GBP

UK NIESR GDP Estimate

-

0.20%

 
 
   
 
 
*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time.  CentralFX are not responsible for the rates shown.
 
 
 

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