Lords tackle Withdrawal Bill

GBP Sterling was unable to make progress on Friday with limited domestic economic developments and the Irish PM Varadkar stating that he was not convinced that there had been sufficient progress on Brexit, and a sharp decline in oil prices didn’t help. The Pound was held below the 1.3300 mark against a firm Dollar and the Euro resisted further losses.  Markets remained sceptical that the Bank of England would increase interest rates in August, and rhetoric in this week’s meeting will be scrutinised for any hints. Former MPC member and known hawk, Andrew Sentance seemed exasperated by stagnant interest rates, commenting “I don’t think having people who aren’t familiar with the UK economy jetted in would be a good thing.”  Sterling opened close to 1.1450 against the Euro, and 1.3240 versus the Dollar.  EUR The Bundesbank cut the 2018 German GDP growth estimate to 2.0% from 2.5%, although the 2019 estimate was increased and the inflation projection for this year was also pushed slightly higher. European Central Bank (ECB) rhetoric was a little more hawkish as some members looked to inject more confidence surrounding the outlook. Nowotny stated that the inflation goal of close to 2.0% had been achieved, but Euro sentiment remained weak.  Euro rallies quickly attracted selling interest and it edged below 1.1600 against the Dollar in the early hours of Monday as the latter continuing to gain support from expectations of a hawkishFed stance. USD The June US New York Empire manufacturing index strengthened to 25.0 from 20.1 and above consensus forecasts of 19.2. There was strength across all components, although the outlook suggested that pricing pressures could be close to peaking.  New York Fed President Dudley stated that further interest rate increases were likely to be slightly above a neutral level with monetary policy switching to slightly restrictive. Dallas head Kaplan stated that the Fed should move gradually and steadily on further rate hikes and favoured a total of three rate hikes for 2018, although he was open to a fourth hike.  President Trump announced the revised list of tariffs on Chinese imports, with markets concerned that tensions would escalate through retaliation and represent a much bigger threat to both the US and global economies and potentially trigger safe-haven demand for Japanese Yen.  Today’s data: 00:50 JPY Imports (YoY) (May) 00:50 JPY Merchandise Trade Balance Total (May) 00:50 JPY Adjusted Merchandise Trade Balance (May) 00:50 JPY Exports (YoY) (May) 13:45 USD Fed’s William Dudley speech 18:00 USD FOMC Member Bostic speech 18:30 EUR ECB President Draghi’s Speech 20:45 USD FOMC Member Williams speech n/a NZD Westpac consumer survey (Q2)

— ROB AFFLECK AND THE SALES TEAM

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