Daily Currency Update

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Conservative leadership contest begins

GBP - British Pound

The final list of Tory candidates to succeed Teresa May was released late on Monday after the 17:00 BST deadline. The candidates required backing from at least eight other MPs meaning Sam Gyimah was unable to join the other 10 Tory hopefuls as he did not rally the support from his peers. Across Tuesday and Wednesday, the candidates will set out their vision for the party and Brexit and on Thursday, Conservative MPs will take part in the first ballot. Candidates need 5% support to proceed from the first round. It is estimated that voting will continue through to Tuesday 23rd July where the new PM is expected to be announced.
Sterling fell on Monday after Manufacturing Production came in 2.8% lower-than-expected. This is just the latest in a long chain of weak UK economic data. The pound is still fluctuating around the $1.27 level as investors wait for further clarity surrounding the future of British politics and in turn, the future of Britain’s relationship with the EU. As Boris Johnson is both favourite to be the next PM and a vocal Eurosceptic, an increased chance of a no-deal Brexit has already been priced into the market. For this reason, a fairly muted response is excpected from any positive economic data released from the UK.

Key Movers

A mixed Monday for President Donald Trump as he decided to shelve plans to impose tariffs on Mexico, whilst threatening China with a new round of tariffs on Chinese imports if he is unable to reach a trade deal with President Xi at the G20 summit on 28th-29th June. China are yet to respond to these threats however as the US-Sino trade war continues, the IMF warn that global growth and financial market strength will continue to suffer.
The Euro stayed fairly dormant on Monday however expect volatility over the coming weeks as Italy engage in talks with the EU over the country’s rising debt and structural deficit levels. The EU have already threatened Italy with disciplinary action as their current situation already breaks European Union rules on deficit and debt due to the knock on effect it could have on all 19 countries that use the Euro.

Expected Ranges

GBP/USD: 1.2665-1.12750 ▼

GBP/EUR: 1.1195-1.1280 ▼

GBP/AUD: 1.8190-1.8350 ▼

GBP/NZD: 1.9200-1.9340 ▲

GBP/CAD: 1.6775-1.6935 ▼