Today is a busy day on the economic as well as political front across the globe. In the UK, the just released data showed that the nation’s jobless rate unexpectedly declined to a fresh eleven-year low during the three months ended May, while the claimant count increased less than expected in June. On the political side, the newly-appointed British Prime Minister, Theresa May, is set to hold talks with German Chancellor Angela Merkel today. Both are keen to minimise the economic fallout of Brexit. In the Eurozone, the flash consumer confidence data for July is awaited, while across the Atlantic the US weekly mortgage application data is the sole economic release for today.

Separately, the International Monetary Fund (IMF) trimmed its global economic growth outlook for this year and the next, warning that Brexit has triggered a wave of uncertainty amid the already-fragile business and consumer confidence.

Pound Sterling – UK Markets

The Pound spiked against the US Dollar, surpassing the crucial 1.31 mark, after UK’s unemployment rate dropped to a fresh eleven-year low level of 4.9% during the three months to May. The nation’s average earnings index including bonus came in line with expectations. However, the number of people claiming unemployment related benefits rose less than expected in June.

Yesterday, Sterling showed little reaction to UK’s upbeat inflation data and ended lower against its major peers. The nation’s consumer price index printed above expectations in July, buoyed by a rise in air fares, prices of motor fuels and a variety of other recreational goods and services. Separately, the IMF slashed its UK growth forecast for the next year, following the nation’s vote to leave the European Union (EU). Nevertheless, the British economy is expected to grow faster than that of Germany, France and Italy next year. The organisation had voiced strong misgivings about Brexit before the EU referendum vote.

US Dollar – US Markets

The greenback ended higher against most of its major peers yesterday after data showed that US housing starts surged in June, bolstering optimism over the health of the nation’s housing sector. A report by the US Commerce Department indicated that the nation’s homebuilding activity rebounded above expectations in June. Moreover, the number of building permits issued advanced more than expected in June, underpinning the theme of strength in the US economy. Separately, the IMF trimmed its US growth forecast for this year by 0.2 percentage points to 2.2% on the back of a weaker than expected first quarter, as a strong greenback and the souring energy sector adversely affected the economy.

Today, the US data docket appears light, with only the weekly mortgage applications data up for release later in the day. However, things will gather pace on the release front as the week progresses and a string of important data points are set to cross the wires. These include the US weekly jobless claims, existing home sales and the manufacturing PMI data.

Euro – European Markets

The shared currency has extended its bearish momentum against the US Dollar this morning. Data released earlier during the session showed that German producer prices advanced more than expected in June, driven by a rise in energy prices. On the other hand, the Eurozone’s current account surplus narrowed in May. Later today the Eurozone’s flash consumer confidence index is scheduled to release, and is expected to dip further in July in a sign of post-Brexit pessimism.

Yesterday, the Euro dropped to a three-week low level against the greenback after the release of disappointing economic releases from the Eurozone. Data indicated that German economic sentiment plunged to its lowest level since November 2012. This steep fall was blamed on the economic and political uncertainty brought about by UK’s decision last month to leave the EU. Further, the index tracking current assessment of business conditions in Germany also came in below forecasts. Meanwhile in the Eurozone, economic sentiment registered its biggest monthly drop ever.

Other Currencies – Highlights

The Japanese Yen is trading lower against the US Dollar this morning amid a broad strength in the greenback. Market participants look forward to next week with bated breath as the Bank of Japan (BoJ) is scheduled to make its latest monetary policy announcement. The event is expected to take the global financial markets on a wild ride. In fact, the Japanese Yen has surrendered some of its gains in recent weeks amid speculation that the central bank will expand its already unprecedented monetary stimulus at the upcoming meeting. After a lull in economic data points earlier this week, Japan will witness the release of the Nikkei manufacturing PMI and all industry activity index in the next couple of days.

Yesterday, the IMF downgraded Japan’s growth prospects for this year, citing the strength in domestic currency. However, the organisation downplayed the need for Japan to weaken its currency in order to boost economic growth and advised against any sort of government intervention.