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BoJo forms cabinet - ECB to make rate decision

GBP - British Pound

New UK Prime Minister, Boris Johnson has announced his cabinet over the past 24 hours with many of the key positions going to prominent Brexiteers. Sajid Javid moves to the post of Chancellor of the Exchequer; Priti Patel comes in as Home Secretary and Dominic Raab is now Foreign Secretary. Another ardent Brexiteer, Jacob Rees-Mogg has been given the role of Leader of the Commons as Boris Johnson tries to fulfill his promise that the UK will be leaving the EU, deal or no-deal by the 31st of October. Johnson is due to address the House of Commons for the first time as PM later today before parliament breaks for its summer recess so expect plenty of aggressive rhetoric re: being prepared to drop out of the bloc without a deal and going it alone if needs be. GBP/USD has been relatively unmoved by the happenings in Westminster with cable continuing to trade in the mid 1.24s throughout the past couple of days. It did briefly get above the 1.25 handle on the back of a BBC interview with EU chief negotiator Michel Barnier whereby some conciliatory words were offered re: Brexit however there was little substance to the comments and the pound quickly dropped back below the big number. Despite the positive tone emanating from BoJo he is soon going to realise getting a an exit from the EU approved by parliament will be a big ask so come the Autumn the hard realities of the situation will soon start to move the pound again after what is likely to be a relatively quiet August. GBP/EUR trades at 1.1210.

Key Movers

With Boris Johnson now confirmed as UK Prime Minister all eyes now turn to the European Central Bank for its latest interest rate decision due at lunchtime. The chances of a 10bp cut to its deposit rate are now close to 50/50 and the euro has fallen as a result over the past few days. What is certain is that if the ECB does decide to hold it will likely telegraph a move for September via its forward guidance in an effort to stimulate an economy that appears to be slowly grinding to a halt. The contraction in output from German manufacturers year to date indicates the Eurozones powerhouse is teetering with recession as the ongoing trade war between the US and China drags down economic output.

Once the ECB rate decision is done all eyes will then focus on tomorrow's US Q2 GDP print with a big miss raising the chances the Federal Reserve will choose to cut rates at its July 31st meeting by 50bp when 25bp is the current consensus.

EUR/USD is down to 1.1125 with USD/JPY at 108.06

Expected Ranges

GBP/USD: 1.2380 - 1.2520 ▼

GBP/EUR: 1.1110 - 1.1265 ▲

GBP/AUD: 1.7825 - 1.7975 ▲

GBP/NZD: 1.8565 - 1.8725 ▲

GBP/CAD: 1.6315 - 1.6475 ▲