Markets digest Trump – Kim summit. EU Withdrawal Bill commences

All eyes were turned towards the historic North Korea summit today, yet currency markets seemed to remain indifferent.

Previous Day's Market Highlights

Monday saw sterling open the week striking softer notes, particularly after industrial production data printed well under forecast. Many saw it as another signal that wider economic slowdown is underway in the UK. GBP/EUR slipped into the lower half of the 1.13 band, GBP/USD sank beneath 1.34. Outside of the UK, much of the world’s attention was on the historic North Korea summit. Both leaders put pen to paper in Singapore yesterday, with Trump agreeing to unspecified “security guarantees” in exchange for Kim’s agreement to complete denuclearisation. Despite the magnitude of the event, currency markets remained somewhat indifferent, most had already priced in the effect of the meeting, and await something more substantial than a non-binding agreement. The Korean Won and the US Dollar barely moved, the Japanese Yen lost some ground against most of the G10.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1353 1.1478 1.1302 1.53%
GBP/USD 1.3383 1.3619 1.3204 3.05%
EUR/USD 1.1773 1.1996 1.1510 4.05%
GBP/AUD 1.7538 1.8241 1.7518 3.96%
GBP/NZD 1.8988 1.9702 1.8928 3.93%
GBP/CAD 1.7361 1.7567 1.7055 2.91%

Today's Market Highlights

Following the Trump-Kim summit, we are likely to see USD continue to fluctuate this morning throughout Trump’s press conference at 9am UK time.

With regards to today’s calendar, the focus lies with UK average earnings scheduled for release at 9.30am this morning. Forecasting to hold steady at 2.9%, it is unlikely to cause a stir until the CPI figure tomorrow completes the full picture of real wage growth tomorrow.

This afternoon, attention turns to US CPI data. Forecasts suggest we could see a 0.2% uptick driven by growth in core goods. Note, forecasts have been fairly inaccurate in recent months and therefore we could see a sharp move if investors re-adjust to a surprise reading.

EU Withdrawal Bill
Later today MPs will vote on the EU Withdrawal Bill. The EU withdrawal bill is the legislation aimed at ensuring the UK has a smooth transition out of the EU, and will mean EU law is no longer supreme in the UK. The legislation suffered 15 defeats in the House of Lords, which will now be debated again in the House of Commons today. A defeat for PM May will see her lose ground and may see sterling slide further.

Today's Economic Calendar

Time Currency Release Consensus Previous
LIVE USD Trump, Kim Summit – Speech
9.30am GBP UK Average excluding Bonus 2.9% 2.9%
9.30am GBP UK Average including Bonus 2.6% 2.6%
9.30am GBP Claimant Count Change May 11.3K 31.2K
12:00 GBP EU Withdrawal Bill
1.30pm USD US CPI Index Excluding Food and Energy 2.2% 2.1%
1.30pm USD US Core CPI YoY 2.7% 2.5%

Caxton