Sterling was again hampered by underlying political uncertainty as Boris Johnson remained the strong favourite to become Conservative Party leader and Prime Minister.
Friday’s US retail sales data was above consensus forecasts which stabilised confidence in the US economy.
A slight shift in US rate expectations ahead of Wednesday’s Fed decision which supported the US dollar. The dollar also continued to gain support from a lack of confidence in other major currencies as concerns over low inflation undermined the Euro while political fears hampered Sterling.
Commodity currencies remained under pressure amid global growth concerns with AUD/USD dipping to 5-month lows. Precious metals reversed initial gains with gold retreating from 3-month highs as the US currency recovered ground.
Bitcoin strengthened sharply to 13-month highs with some evidence of demand out of Hong Kong.
Sterling was again hampered by underlying political uncertainty as Boris Johnson remained the strong favourite to become Conservative Party leader and Prime Minister. Given his commitment not to extend the Brexit departure date, there were increased concerns over the risk of a ‘no-deal’ outcome. Fragile confidence in the global outlook continued to sap potential Sterling support as GBP/EUR held firm despite a weak Euro and GBP/USD slid to 2-week lows below 1.2600.
CFTC data maintained a heavy short position, but positive developments will be needed to trigger any liquidation in shorts. After Hancock’s withdrawal from the race, on Friday, there were no major political developments over the weekend with Johnson still seen as the clear frontrunner while Brexit policy remained the key focus. Overall confidence in the economic outlook remained very fragile as the British Chambers of Commerce downgraded their 2020 growth forecast to 1.0% from 1.3%.
Overall, GBP/USD settled just below 1.2600 with GBP/EUR just above 1.1200 on Monday with weak underlying UK sentiment.
|13:30||NY Empire State Manufacturing Index(JUN)||8.5||17.8|
|13:30||CAD Foreign Securities Purchase(APR)||-||-1.49B|
|15:00||NAHB Housing Market Index(JUN)||-||66|
|21:00||USD TIC Net Long-Term(APR)||-||-28.4B|
|22:00||NZD Westpac Consumer Sentiment||-||103.8|