US/China trade and Brexit headlines in Focus

The latest US/China trade and Brexit headlines are key this week, particularly given today's light calendar.

Previous Day's Market Highlights

The pound strengthened against a weaker dollar on Friday, briefly testing 1.33, the rate’s highest levels since 14 June. Sterling fared less well against a stronger euro, reversing some of Thursday’s post BoE gains to fall below 1.14 as euro-dollar made gains above 1.16. The single currency was supported by positive Services and composite PMIs, although the Manufacturing indices softened.
 
The Canadian dollar weakened Friday afternoon after CPI figures disappointed. OPEC reached an agreement to raise production by the equivalent of approximately 600K barrels a day. This saw a rise in both US WTI and Brent Crude oil prices. Incumbent President Erdogan’s victory in this weekend’s elections saw the Turkish lira jump as markets opened.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1382 1.1498 1.1314 1.60%
GBP/USD 1.3234 1.3473 1.3102 2.75%
EUR/USD 1.1631 1.1853 1.1510 2.89%
GBP/AUD 1.7846 1.7981 1.7395 3.26%
GBP/NZD 1.9206 1.9339 1.8905 2.24%
GBP/CAD 1.7615 1.7661 1.7055 3.43%

Today's Market Highlights

The calendar gets off to a quiet start today. In the afternoon, the US releases the Chicago Fed National Activity Index, forecast to decline, and New Home Sales, forecast to rise (13:30 BST). The mixed prints may provide little new price direction.
 
Politics will remain key this week. Over the weekend, the latest trade headlines consisted of reports that Trump has threatened further retaliation against China. Additionally, Brexit will be in sharp focus given the EU Summit at the end of the week. The latest progress on negotiations will be evaluated; the summit poses a downside risk to the pound.
 
Later this week, the RBNZ is expected to keep interest rates on hold at 1.75%. The US and the UK will release final Q1 GDP, while preliminary June Eurozone CPI is forecast to show that headline inflation accelerated to 2.0% in June, but that core inflation remained subdued.

Today's Economic Calendar

Time Currency Release Consensus Previous
1:30pm USD Chicago Fed National Activity Index (May) 0.09 0.34
3:00pm USD New Home Sales MoM (May) 0.667M 0.662M

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