GBP Eyes Data after Drop on Cabinet Resignations

Sterling saw volatility yesterday on the raft of political headlines. Today, any further headlines and the latest UK data will drive the pound.

Previous Day's Market Highlights

Yesterday was a volatile day for sterling. After initially gapping higher on Prime Minister May’s soft Brexit Chequers plan as Asian markets opened Sunday evening, the pound lost its gains during the afternoon session as Boris Johnson resigned as Foreign Secretary. This followed the overnight resignation of David Davis as Brexit Secretary. However, the lack of challenge to May’s leadership gave the pound some relief. Davis and Johnson have been replaced by Dominic Raab and Jeremy Hunt, respectively.
 
The events saw sterling fall back below 1.13 against the euro and 1.33 against the dollar. Euro-dollar continued to trade above 1.17, meeting resistance around 1.1790, before heading lower as the dollar gained. The economic calendar was light and exchange rates overall remained in familiar ranges.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1282 1.1471 1.1234 2.07%
GBP/USD 1.3254 1.3448 1.3049 2.97%
EUR/USD 1.1748 1.1853 1.1510 2.89%
GBP/AUD 1.7755 1.7981 1.7472 2.83%
GBP/NZD 1.9369 1.9622 1.8925 3.55%
GBP/CAD 1.7396 1.7791 1.7168 3.50%

Today's Market Highlights

Markets will continue to keep an eye on UK politics. Any signs of a challenge to Prime Minister May’s leadership would increase uncertainty and weaken the pound. Also key are this morning’s data releases (09:30 BST)—positive figures could give the pound relief, while disappointing figures could see it head lower.
 
A further softening in Economic Sentiment (10:00) could put some downwards pressure on the euro, but the overall impact is likely to be relatively limited. The Canadian dollar could see some support off the back of improved housing data (13:15, 13:30).

Today's Economic Calendar

Time Currency Release Consensus Previous
9:30am GBP Manufacturing Production MoM (May) 0.9% -1.4%
9:30am GBP Manufacturing Production YoY (May) 1.9% 1.4%
9:30am GBP Industrial Production MoM (May) 0.5% -0.8%
9:30am GBP Industrial Production YoY (May) 1.9% 1.8%
9:30am GBP Total Trade Balance (May) £-5.28B
9:30am GBP GDP MoM (May) 0.3%
10:00am EUR Eurozone ZEW - Economic Sentiment (Jul) -13.2 -12.6
10:00am EUR German ZEW - Economic Sentiment (Jul) -18.0 -16.1
1:15pm CAD Housing Starts s.a. YoY (Jun) 210K 196K
1:30pm CAD Building Permits MoM (May) 0.1% -4.6%
6:00pm EUR ECB's Lautenschlager Speaks
2:30am AUD Home Loans (May) -1.9% -1.4%

Caxton