Cabinet resignations rock Sterling

The pound experiences its worst day in a year as the Brexit deal fallout continues.

Previous Day's Market Highlights

After a rollercoaster week, May dealt her cards to the Cabinet whose approval is needed on the Irish Border backstop. The first big headline yesterday was that the Chief Brexit Negotiator Dominic Raab sent a letter to May resigning, quoting that he could not fulfill the deal she was aiming for. This came as a low blow to May as he is the second Chief Brexit Negotiator to resign this year, causing Sterling to dive across the board.

This was shortly followed by the resignation of hard Brexiter Esther McVey which then created a domino effect for five more ministers and aids leaving May’s Government. To put the cherry on the cake Dominic Raab submitted a no confidence vote in May. We finished off the London trading session with a press conference from May who stood by her plans which she set out with from the start. The days events helped to push sterling more than 1.5% lower, the drama didn’t just affect the currency market but also the UKs equity markets, seeing a total market value of £6bn wiped off the combined value of RBS, Barclays and Lloyd’s and seeing pressure on UK only publicly owned companies.

The economic calendar had little effect on the markets yesterday seeing US retail sales print above forecast however UK Retail Sales came out MoM -0.7% lower than expected and -0.8% YoY.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1281 1.1506 1.1172 2.90%
GBP/USD 1.2797 1.3175 1.2691 3.67%
EUR/USD 1.1342 1.1500 1.1302 1.72%
GBP/AUD 1.7592 1.8459 1.7502 5.18%
GBP/NZD 1.8756 1.9903 1.8657 6.26%
GBP/CAD 1.6843 1.7285 1.6637 3.75%

Today's Market Highlights

The Focus ahead for today will be mostly on any further resignations from May’s cabinet and most importantly if there is a challenge for leadership with a no confidence vote from her peers. On the data front the main focus is the Final Eurozone CPI at 10am which is expected to have reduced MoM at 0.2% and YoY to have increased to 2.2%. Elsewhere in the Eurozone we have final Italian CPI MoM and YoY at 11am, this will be interesting data set to watch due to the news earlier in the week that they will not be changing their budget proposal to the EU.

Today's Economic Calendar

Time Currency Release Consensus Previous
10:00am EUR Final CPI (y/y) 2.2% 2.1%
10:00am EUR Final Core CPI (y/y) 1.1% 1.1%
1:30pm CAD Manufacturing Sales (m/m) 0.1% -0.4%