- With little economic data and no real news to speak of, following Friday afternoon’s rally to recent highs, the Pound continued to weaken in FX space yesterday. GBP/EUR slid back below the 1.1700 handle, whilst GBP/USD settled in the Mid-1.3000’s.
- The European Commission cut Eurozone growth forecasts for 2019 yesterday. The Commission now think the single currency bloc will grow by just 1.2%, down from the 1.3% estimate in February. Their forecast for the EU as a whole, which still includes the UK, was cut to 1.4% from 1.5%. The Commission said the European economy is showing resilience, but the risks to the outlook remain pronounced.
- It was confirmed yesterday afternoon that the UK will take place in European elections with the Government seemingly having failed to reach a compromise deal with the Labour party. The EU had granted the UK an extension to article 50 to the 31st October, however the bloc stipulated that the UK must put forward candidates for the European elections if a deal for leaving the EU had not been agreed by Parliament by the 23rd May. Senior Tory Minister David Lidington confirmed the situation, adding he ‘deeply regrets’ that the UK had not left the EU as planned in March.
- Sticking with Brexit, EU Commission President Jean-Claude Juncker said staying quiet during the UK’s referendum on EU membership was the biggest mistake he has made as the EU’s chief executive. Respecting the wishes of the then PM David Cameron, Juncker said it was a mistake not to intervene during the referndum, as the EU could have been the one’s to destroy the lies being circulated.
- According to a IBD/TIPP poll, US economic optimism hit a 15-year high during May. The poll which surveys consumers hit a reading of 58.6, that was up from 54.2 in April. Any reading above 50 represents optimism, whilst below 50 pessimism. This was also the 32 consecutive month of optimism.
- Canadian Ivey PMI 55.9 (51.5 Exp).
- The main story overnight was the Reserve Bank of New Zealand’s slightly surprise decision to cut their benchmark interest rate by 25 basis points, with the official cash rate now standing at a record low of 1.50%. Whilst not a total shock, the RBNZ said they took the decision as when considering the employment and inflation outlook, the lower cash rate was now most consistent with achieving their objectives and provides a more balanced outlook for interest rates. The central bank also projected that rates had a chance of going even lower.
- The New Zealand Dollar was initially sold off aggressively in FX markets, however those losses were quickly pared back. The Kiwi Dollar does however remain substantially lower than where it was trading yesterday evening ahead of the RBNZ meeting.
- The Pound is on the back-foot this morning as hopes of a Brexit compromise between the Tory and Labour party appear to be fading.
- German Industrial Production m/m +0.5% (-0.5% Exp)
- The Daily Telegraph are reporting that Senior Tory MP’s are going to give Theresa May until this afternoon to set out her ‘road map’ to resignation.
- Very little in the way of economic data today.
- Minutes from the ECB’s most recent monetary policy meeting will be released at 12.30pm.
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||BOE Member Ramsden Speaks
||ECB Monetary policy meeting minutes
||Fed Member Brainard Speaks
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