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The U.K. has a new PM, which didn’t turn out to be a good thing for Sterling bulls as the odds of a no-deal Brexit rose as the week went on.
United Kingdom Headlines and Economic data
Monday:
- Brexit May Have Already Triggered U.K. Recession, Niesr Says
- Two Top U.K. Officials Vow to Quit If Boris Johnson Becomes Next PM
- Strong move lower for the British pound against the majors on the above two headlines; a one-two punch of economic distress and political turmoil had traders selling Sterling right from the London session open.
Tuesday:
- Boris Johnson wins race to be Britain’s next leader – with his victory, the odds of a no-deal Brexit rises as he has been a strong proponent of leaving the EU on October 31st with or without a deal
- CBI’s latest quarterly Industrial Trends Survey: Manufacturing activity dropped in the quarter to July
- Brexit means Bank of England must be ‘fleet of foot’: Haldane
- Bank of England’s Haldane ‘very cautious’ about cutting rates – this is possibly the catalyst for Sterling’s broad bounce, reducing the odds of a rate cut from the BOE to match what other major banks are doing
- BOE Isn’t Tethered to Forecasts Suggesting Hikes, Saunders Says
- DUP to support Johnson’s minority administration
Wednesday:
- U.K. Mortgage Approvals Edge Higher in Stable Housing Market
- UK’s Hammond quits as finance minister before Johnson becomes PM
- EU lawmakers see higher risk of no-deal Brexit with PM Johnson
- Broad move higher in Sterling pairs during the London trading session. There doesn’t seem to be a direct catalyst for the positive sentiment, so it’s possible it’s short covering/profit taking on bets that Boris Johnson would win the PM position.
Thursday:
- EU will not renegotiate Brexit deal, Juncker tells Johnson
- U.K. Retail sales fall for longest period since 2011
- UK’s Johnson tells EU’s Juncker that Brexit backstop must go – this was likely the catalyst for the British pounds shift back into bear mode and the run lower into the weekend. With the EU unwilling to re-open negotiations on Brexit, a no-deal Brexit probably takes the lead in the likely outcome of the whole situation.
Friday: