The Dollar is broadly stable versus the Euro and Sterling but slightly weaker against risk-sensitive currencies including the Australian Dollar and a number of emerging market currencies. The Dollar did not react much to the release of headline CPI-inflation of 2.9% yoy in June. While this was a six-year high and suggests that the Federal Reserve may still feel the need to hike rates twice more this year, it was only a marginal increase from 2.8% yoy in May and in line with expectations.
The GBP/USD cross remains largely lifeless, unmoved by President Trump’s visit to the UK, the government’s publication of a White Paper setting out the blueprint for the UK’s relationship with the EU post Brexit and by the elimination of Team England from the Football World cup in a thrilling semi-final. The government’s much talked about White Paper sets out an ultimately soft version of Brexit, with the aim of securing the closest possible ties with the EU. However, the government appears to have abandoned plans for close trade ties for Britain’s significant financial services sector. The market’s agnostic response suggests that the Paper’s content was broadly in line with expectations but the question of whether this blueprint will be acceptable to both Parliament and the EU remains unanswered for now.
