Sterling poised for Tory leadership showdown
Wednesday 26 June, 2019
Daily Currency UpdateGBP - British PoundIt was a relatively quiet day for the pound yesterday during the European session as investors are turning their attention more and more towards the Hunt/Johnson leadership showdown as it was announced that the new leader will be announced on July 23rd leaving the new PM exactly 100 days to leave the EU if the October 31st deadline is to be held. The prospect of this deadline being a hard end date that Boris Johnson doesn't waver from is unlikely, given Parliament's current DNA, but this is still enough to make investors nervous. Away from Brexit, retail sales fell to its lowest levels in 10 years this month according to the CBI. The sharp drop off is partly explained by the incredibly warm weather last summer and the World Cup which encouraged consumer's to spend but fast forward into 2019, UK shoppers have followed the example of UK businesses, stockpiling ahead of the original Brexit date in March.
Key MoversAs mentioned earlier in the week, with so little to offer this week the pound really is being dictated to by events elsewhere and this was certainly the case late yesterday when ultra FOMC dove James Bullard announced that it wasn't the time for a 50bp cut in US interest rates. This surprise from Bullard who suggested that an 'insurance' cut was necessary points to a 'one and done' approach from the Federal Reserve rather than a series of interest rate cuts. The dollar took its cue from this, rallying against the pound late as well as recovering against its biggest peer, the Japanese Yen. The Euro had also hit a three month high against the US dollar before retreating back. Maybe it's won't be all doom and gloom for the US dollar for the rest of the year. Over in New Zealand, the Reserve Bank of New Zealand kept its interest rates on hold overnight following the cut in May, however the accompanying statement from the bank was very dovish in nature, signalling that further cuts could be needed.Finally, following the move yesterday where Bitcoin broke $11,000 (a 15 month high), it carried on its rally overnight breaking $12,000.
- GBP/USD: 1.2550 - 1.2690 ▼
- GBP/EUR: 1.1140 - 1.1210 ▼
- GBP/AUD: 1.8100 - 1.8270 ▼
- GBP/NZD: 1.8990 - 1.9200 ▼
- GBP/CAD: 1.6660 - 1.6750 ▼