Sterling rallied against the US Dollar on news that the Senate rejected a measure to repeal parts of Barack Obama’s health care law. Senate Democrats found support from three GOP senators who disagreed with their party’s plan. One of them, John McCain, returned to Senate after recovering from a brain surgery. The Senate’s rejection is regarded as a strong blow to Donald Trump and his plans for reforms.

In the UK, Philip Hammond said in an interview that any transitional period after Brexit should end by the time of the next scheduled parliamentary elections in 2022. He said that EU nationals will be able to work in Britain during the transition period and that cliff-edges should be avoided. The Chancellor noted that it’s very important to tackle Britain’s debt problem and stressed the need for fiscal discipline.

Pound Sterling – UK Markets

Today, Sterling strengthened against the US Dollar, with the exchange rate set at $1.30. The Pound weakened against the Euro, with the exchange rate set at €1.11. Brexit negotiations are on centre stage due to the absence of important economic updates from the UK.

Chancellor Philip Hammond said on BBC that any transitional period after Brexit must end by the end of the next scheduled UK parliamentary election in June 2022. “People have talked about a year, two years, perhaps three years. I think there is a broad consensus that this process has to be completed by the time of the next scheduled general election in 2022,” said the Chancellor. Hammond added that he wants to avoid the possibility of a cliff-edge, regarding the free movement of people and goods, when the UK leaves the EU in March 2019. He also noted that changes to rules affecting the relationship between the UK and the EU could be phased in gradually, during the transitional period.

Michel Barnier, the EU’s chief Brexit negotiator, in his report to the EU member states said that the Brexit negotiations are losing momentum as the British side is unable to provide clarity on its positions. Barnier seemed pessimistic that sufficient progress won’t be achieved until the European Council’s October meeting. The British government hopes that it can start talks with the EU officials on a new trade agreement, in the next few months, but the EU has requested clarification on certain matters, such as the movement of goods and people post-Brexit, before it can open the trade deal chapter.

US Dollar – US Markets

The US Dollar slumped against the Euro, with the exchange rate set at €0.85. The US currency dropped on news that the Senate rejected the “skinny” amendment for the Obamacare repeal bill.

The seven-year Republican campaign to dismantle the health care law, planned by the Obama administration, has been derailed. 51 senators voted against the repeal and 49 in favour. All Democrats voted against and found extra support in the votes of three Republican senators, including Senator John McCain, who returned to vote after he had a brain surgery to remove a tumour. President Trump tweeted that it was his idea to leave the Obamacare implode, and after that to make a new deal.

Later today, the preliminary data regarding the growth of the US GDP, in the second quarter of the year, will be published. ING published a rather optimistic report that said that data will show a decent GDP rebound in this time period, in contrast to the first quarter’s weak numbers. The bank reports that the rebound occurred due to a reversal of fortunes for consumption and inventories. ING analysts suggest that data will show that the wage increase reading will be the strongest since last February.

Euro – European Markets

The Euro rallied against the US Dollar, gaining 0.2% in value, with the exchange rate set at $1.17. The single market currency took advantage of the Dollar’s drop in global markets and was boosted by the positive data coming from France and Spain.

According to preliminary data released by the INSEE, the French economy expanded by 0.5%, in the second quarter of 2017, in line with analysts’ expectations. The French GDP has been growing by 0.5% in the last three quarters, which experts suggest is a solid performance for the economy. Exports surged, recording a 3.1% increase, while imports grew by only 0.9%.

More positive news came from Spain when the INE, the national statistics service, published the GDP data for the year’s second quarter. Spain’s GDP growth was even stronger than France’s, recording a 0.9% reading. The result was better than the 0.8% growth in the first quarter of 2017. The Spanish economy has been expanding for 15 consecutive quarters and has now reached its pre-crisis peak.

Other Currencies – Highlights

The Pound edged up against the Australian Dollar, trading at 1.64 AUD. A Reuters poll showed that the majority of economists who participated, believe that the Reserve Bank of Australia (RBA) will keep its benchmark interest rate stable at 1.5%, in Tuesday’s upcoming meeting. Most of the economists polled said that they predict a rate hike by December 2018, while only two of them said that they expect an easing.

Sterling jumped against the New Zealand Dollar, trading at 1.75 NZD. The Kiwi was knocked lower because of news that there has been an outbreak of a serious bacterial cattle disease. The Primary Industries ministry said in a statement that the outbreak is well under control with stock movement restrictions in place and added that the testing will continue. New Zealand is the world’s largest dairy exporter and traders were worried that this may affect market access for its products.