No-Deal Brexit Preparations Gear Up.

As Boris Johnson enters his first full week as Prime Minister it has been reported that his new government is working on the assumption that Britain will leave the European Union without a deal on 31 October and as such set to ramp up borrowing to cover the costs.

New Chancellor Sajid Javid is expected this week to reveal the governments plans to fund a no-deal and outline a massive public information campaign on the implications of a disorderly exit. Another new member of the cabinet, Michael Gove, who is now overseeing no-deal preparations as head of the Cabinet Office said yesterday that planning for no-deal was the government’s “number one priority.”

Prime Minister Johnson is visiting Scotland today and is expected to announce £300m of funding for Scotland, Wales and Northern Ireland. In a move to try and promote unity within the UK, Johnson has called for renewal of “the ties that bind our United Kingdom.”

Across the pond, the most anticipated event in financial markets since the G20 meeting in Osaka is likely to see the US FOMC announce its first rate cute in over a decade on Wednesday evening. The run up to Wednesday’s announcement has led to enormous amounts of discussion and forecasting within the financial markets revolving around a debate on whether the cut would be of 25bp or 50bp. As the markets have priced in a rate cut as an almost certainty the US dollar is only expected to significantly move if the cut is larger than expected or Fed Chairman Powell changes his course for the rest of the year.

Wednesday also sees key economic data releases in Europe with GDP, Unemployment Rate and CPI numbers all due out on Wednesday morning. With speculation growing that the EU will need to change course on monetary policy to stimulate growth in the block, these numbers could give an indication of how soon this change may happen.

Economic Calendar

Expected Previous
22:45 NZD Building Permits s.a. (MoM) (Jun) - 13.20%
23:30 JPY Unemployment Rate (Jun) 2.40% 2.40%
23:30 JPY Jobs / Applicants Ratio (Jun) 1.62 1.62
23:50 JPY Industrial Production (MoM) (Jun) -2% -2%
23:50 JPY Industrial Production (YoY) (Jun) - -2.10%

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.