Market Brief: Ministers hope to strike a temporary deal with the European Union to retain the key benefits of the customs union for an interim period after Brexit.
15 Aug 2017
Latest rates | Today's data release | ||||||
---|---|---|---|---|---|---|---|
GBP/USD | GBP/EUR | GBP/AUD | GBP/AUD | GBP/CHF | 09:30 | UK CPI data | |
1.2978 | 1.1040 | 1.6512 | 1.6534 | 1.2493 | 09:30 | UK PPI data | |
GBP/JPY | GBP/HKD | GBP/ZAR | EUR/USD | EUR/GBP | 13:30 | US retail sales | |
141.80 | 10.1492 | 17.4412 | 1.1761 | 0.9057 | |||
Investec currency forecasts as at 27 July 2017 | Key levels | ||||||
Q3 '17 | Q4 '17 | Q1 '18 | Q2 '18 | Support | Resistance | ||
GBP/USD |
1.29 | 1.30 | 1.30 | 1.31 | 1.2955 | 1.3060 | |
GBP/EUR | 1.13 | 1.14 | 1.13 | 1.13 | 1.0960 | 1.1100 |
Market overview
Today the Government will reveal a position paper that will seek a deal allowing the transit of goods across borders to continue as normal by creating a ‘temporary customs union’. The Government will say it wants to create “the freest and most frictionless possible trade in goods between the UK and the EU”. David Davis suggested that a main focus is to ensure that the UK can develop a trade policy which enables us to build a stronger, fairer and more prosperous UK. The paper will also reject the idea of a lengthy transition period, during which the status quo is maintained while negotiations drag on. The next paper, in a series, released tomorrow will address the borders between Ireland and Northern Ireland.
German GDP figures were released early this morning, showing that the German economy grew by less than expected in the second quarter as net trade dampened an overall expansion which was driven by strong household spending and rising state expenditure. But the growth rate for the first quarter was revised up to 0.7 percent on the quarter from 0.6 percent. The YoY figure came in 0.2 percentage points above expectations showing an annualised growth rate of 2.1%, such that the year-over-year growth pace was recorded at its fastest in 3 years.
City economists are, on average, forecasting that the UK CPI will rise to show an annual rate of inflation of 2.7% for July, up from 2.6% in June. Inflation is expected to resume its upward path following June’s surprise slowdown, when weaker global oil prices pushed down the cost of petrol and diesel, providing some respite for consumers. However, in May, inflation had hit a four-year high of 2.9%. Coupled with low pay growth, the rising cost of living means a squeeze on household real spending power. Consumers are using their credit cards to fund spending and the Bank of England has expressed alarm about the increase in personal debt. Should we see a figure of 2.7% or above, followed by growth in wage inflation tomorrow, we can expect to hear the speculators start to ramp up expectations of a rate rise sooner than the back end of 2018.
German GDP figures were released early this morning, showing that the German economy grew by less than expected in the second quarter as net trade dampened an overall expansion which was driven by strong household spending and rising state expenditure. But the growth rate for the first quarter was revised up to 0.7 percent on the quarter from 0.6 percent. The YoY figure came in 0.2 percentage points above expectations showing an annualised growth rate of 2.1%, such that the year-over-year growth pace was recorded at its fastest in 3 years.
City economists are, on average, forecasting that the UK CPI will rise to show an annual rate of inflation of 2.7% for July, up from 2.6% in June. Inflation is expected to resume its upward path following June’s surprise slowdown, when weaker global oil prices pushed down the cost of petrol and diesel, providing some respite for consumers. However, in May, inflation had hit a four-year high of 2.9%. Coupled with low pay growth, the rising cost of living means a squeeze on household real spending power. Consumers are using their credit cards to fund spending and the Bank of England has expressed alarm about the increase in personal debt. Should we see a figure of 2.7% or above, followed by growth in wage inflation tomorrow, we can expect to hear the speculators start to ramp up expectations of a rate rise sooner than the back end of 2018.