Kantox currency update: pound suffers on UK cabinet’s turmoil
The British pound lost ground against the major currencies on Monday, as the resignations of David Davis and Boris Johnson, the most relevant Eurosceptic ministers, which leave Theresa May’s Government in a delicate situation with the Brexit negotiations at a critical point.
The euro remained trading within previous ranges, consolidating near three-week highs against the dollar, while the Japanese yen retreated across the board as with risk appetite prevailing in an otherwise quiet summer trading session.
EUR/USD hovering below 1.1800. The euro advanced on Monday to three-week highs, right below 1.1800, buoyed by ECB Draghi’s bullish prospects about eurozone economy before pulling back and return to the mid-range of 1.1700. As at London market opening times, the EUR/USD is trading at 1.1745.
GBP/USD plunges more than 1% to 1.3200. The pound dropped sharply on the back of the resignation of two ministers in less than 24 hours. The cable, that was trading at 1.3360 area, plunged to intra-day lows at right below 1.3200 before trimming gains on Tuesday’s early trading. As at London market opening times, the GBP/USD is trading at 1.3250.
USD/JPY testing highs above 110.00. The dollar appreciated against the yen favoured by a positive market sentiment on Monday and has returned to test immediate resistance area between 111.00 and 111.50. As at London market opening times, the USD/JPY is trading at 111.05.
In the Calendar Today
Today at 08:30 GMT National Statistics will release a string of indicators, with special interest on the Gross Domestic Product. After the slowdown witnessed in the first quarter, diverse BoE officials are confident that the economy rebounded in the Q2, which will set the conditions for an August rate hike. This outcome would have a bullish impact on the pound while, on the other hand, a weak GDP would increase negative pressure on the sterling.
08:30 GMT UK: Gross Domestic Product (MoM) (May)
Previous: Expected: 0.3%
08:30 GMT UK: Industrial Production (MoM) (May)
Previous: -0.8% Expected: 0.2%
08:30 GMT UK: Manufacturing Production (MoM) (May)
Previous: -1.4% Expected: 0.3%