What’s been happening?

Pound Sterling – UK Markets 

The Bank of England Governor Mark Carney expressed a more optimistic outlook for the UK’s economy, which stoked market expectations of an interest rate rise in August. Carney said that recent data, including a strong bounce back in household spending, had given him greater confidence that weak first-quarter growth was largely due to exceptionally bad weather. In a speech at the Northern Powerhouse Summit in Newcastle, Mr Carney said: "Overall, recent domestic data suggests the economy is evolving largely in line with the May Inflation Report projections, which saw demand growing at rates slightly above those of supply and domestic cost pressures building." 

The Pound edged up 0.2% against the US Dollar to $1.3254 following Carney’s comments. However, lingering political factors will continue to limit the Pound’s advance, as markets look to today’s Cabinet meeting where the government will attempt to secure a unified Brexit stance. Failure to do so could spark a leadership challenge.

US Dollar – US Markets

US private sector employment remained solid in June, as employers added 177,000 jobs, slightly below the forecast expectation of 190,000, according to the ADP report released yesterday. May’s gain was upwardly revised to show 189,000 growth instead of a previously estimated 178,000. There was, however, a surprise increase in initial jobless claims last week, the number rose to 231,000 from 228,000, which had a slight impact in nudging the dollar weaker, as the released data dampened expectations surrounding Friday’s employment report. 

The Institute for Supply Management (ISM) reported yesterday that its non-manufacturing activity index rose to 59.1 in June from 58.6 previously. The survey’s new orders index jumped 2.7 points to 63.2, while a measure of backlog fell 4.0 points to 56.5. The fresh data failed to provide a significant Dollar lift and no traction following the Federal Reserve minutes. 

Euro – European Markets

German industrial orders bounced back in May to 2.6% to supporting expectations of an economic upturn. There was also an upward revision to April’s data which triggered some relief surrounding the outlook and helped support the Euro as it advanced to a 3-week-high against the Dollar yesterday. 

German industrial output also rose in May, data showed early today, suggesting that factories in Europe’s largest economy are recovering after a weak start of the year. Data from the economy ministry showed output increased by 2.6% and beat economists’ expectation for a rise of 0.3%. The Euro rallied near 0.8850 against Sterling and around 1.1707 against the US Dollar this morning.  

What’s coming up? 

UK: UK Markets will be focusing on continuing political developments ahead of a key cabinet meeting today, where the government will look to find a unified plan on Brexit trade policies. 

US: Markets will look to the employment report out this afternoon, where June’s average earnings and jobless claims indexes will be finalised. 

EU: The rest of the week looks quiet for the Eurozone. Fresh German imports and exports data for the month of May will be released on Monday.