A net negative week for the British pound on continued net weak economic updates from the U.K. and a gloomy outlook from the Bank of England.
United Kingdom Headlines and Economic data
Monday:
- The price of newly-marketed U.K. property rises by an average of 0.3%
- Boris Johnson gets boost in race to become Britain’s new PM
- The broad move lower in Sterling pairs at the end of the U.S. session doesn’t seem to have a direct catalyst, but it’s possible that it could have been due to U.S. dollar strength on geopolitical risks rising (Iran says it will breach nuclear deal enrichment limit)
Tuesday:
- Hammond ‘prepared to resign’ over May’s spending plans
- Bank of England official flags risk of capital flight from UK
- Corbyn to back second Brexit referendum
Wednesday:
- UK factory orders slide in June as car output withers
- Brexit campaigner Boris Johnson advances on Britain’s top job
- Car price war and falling air fares cool UK inflation – Sterling pairs rally on the news. While lower than the previous reads, the overall data beat expectations more than not with PPI being the only real disappointment in the batch of inflation updates. Possibly a “buy-the-rumor, sell-the-news” scenario as Sterling pairs as well.
- The broad rally in Sterling pairs continues a bit further with U.S. dollar weakness after the FOMC’s latest monetary policy statement coming in dovish and opening the door for rate cuts this year.
Thursday:
- Cool weather hits UK retail sales in May in gloomy sign for economy
- Sterling slips as Bank of England cuts second-quarter growth to zero
- UK PM candidate Johnson extends lead in fourth round of leadership contest
Friday:
- Public sector net borrowing excluding public sector banks in May 2019 was £5.1 billion, £1.0 billion more than in May 2018
- And then there were two: Boris Johnson and Jeremy Hunt in battle to lead Britain
- No direct catalyst for the broad Sterling rally during the U.S. session, but it’s likely once again off of U.S. dollar weakness after disappointing U.S. manufacturing data and more calls for rate cuts from Fed members.
