The US dollar has strengthened again over the last 12-24 hours, supported in part by safe haven demand. Markets have moved out of risk overnight as Trump said late yesterday that a meeting with North Korea’s Kim Jong-un may be delayed. This news is weighing heavily on GBP/USD this morning with the pair trading close to 6 month lows.
In other news yesterday the UK Inflation Report Hearings came and went. We heard nothing much new and it was a bit of a snooze fest if honest. Carney reiterated how the central bank would be monitoring data closely but failed to signal any likelihood of a rate hike in August, and although it shouldn’t have come as too much of a surprise, cable was sold. Later in the day US economic data printed better than expected and the GBP/USD sell off was reaffirmed.
Focus this morning turns to UK inflation data and with cable teetering, an August rate hike priced at 50:50 and few clues given away at yesterday’s hearings, it makes this data release even more important than usual. Given the slide we’ve seen in GBP/USD over the last few weeks, there’s an argument to say risk is to the upside, but there’s still plenty of room for a further sell off in GBP/USD as we stand. Later on this evening the U.S. FOMC Meeting Minutes are released, another key release that may cause further volatility.