Euro and Sterling sentiment remained weak amid political concerns.

The dollar lost ground amid weak housing data and lower yields. IMF calculations that the currency was significantly overvalued also fuelled anxiety over White House intervention.

The Euro and Sterling recovered slightly, although underlying sentiment remained weak amid political concerns.

Global equities moved significantly lower as unease overgrowth trends and earnings concerns while bond yields moved lower on weaker risk appetite.

Oil prices declined after mixed EIA inventory data and demand concerns. Gold moved sharply higher in US trading with silver also making strong gains to 4-month highs.

Commodity currencies were resilient amid US fragility and net demand for metals.

The UK CPI inflation rate held at 2.0% for June which was also in line with consensus forecasts. The core inflation rate increased slightly to 1.8% from 1.7% which also matched expectations while wholesale inflation rates declined slightly.

Brexit Secretary Barclay stated that the risks of a ‘no-deal’ Brexit were under-priced, although he also stated that his meeting with EU Chief Negotiator Barnier were misleading. Overall market unease surrounding political risks continued to have an important Sterling impact, especially with reports of increased protection buying in the options market. There were also fears that a tough UK negotiating stance under the next Prime Minister would quickly lead to deadlock with the EU.

Overall Sterling sentiment remained negative, but there was an element of short covering after recent selling which provided some respite. GBP/USD rallied to 1.2450 against the weaker dollar after finding support below 1.2400 while GBP/EUR found some support around 1.1050 with parliamentary attempts to block a suspension of the House of Commons providing slight UK support.

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