Market Brief: UK does not intend to build 'Mad Max' economy

30 May 2020

Shaun Garrett

Dealing team

Yesterday Eurozone finance ministers chose Spanish economy minister Luis de Guindos to succeed ECB Vice President, Vitor Constancio, in May.

Today's data releases
  Key levels
09:45 UK's David Davis to speak in Vienna   Support Resistance
10:00 EZ ZEW
GBP/USD 1.3916 1.4073
15:00 EZ consumer confidence
GBP/EUR 1.1250 1.1391

Market overview

The move is likely to boost the chances of a German becoming head of the ECB next year. The choice of a Southern European for VP increases the likelihood that a northern Euro area country candidate, such as German Bundesbank President Jens Weidmann, could be elected to replace Mario Draghi as head of the ECB in 2019. This move could influence the bank’s ultra-loose monetary policy for the 19-country common currency area. The effect on the Euro has been muted, but as momentum grows for Weidmann we should start to see his views/policy have more of an effect on the single currency.
 
The head of a British manufacturing industry body has suggested that they need clarify on whether the country will clinch a Brexit transition period to smooth its departure from the EU. With Theresa May hoping to secure a two-year transition deal next month, Judith Hackett, chair of the EEF, said many companies were confused about what Brexit would mean for them. She urged the government to recognise the risks of clamping down too hard on EU workers coming to Britain, despite concerns among many voters about migration which were a big factor behind the 2016 referendum decision to leave the EU.

This morning Brexit Secretary David Davis will be speaking in Vienna at 9:45am (UK time); he is expected to say that the UK is not intending to build a ‘Mad Max’ economy that plans to slash regulation to undercut rivals. David Davis will say fears about a "race to the bottom" in workers' rights and environmental standards are "based on nothing". He will argue for continued close cooperation between the UK and the EU on regulations and standards. The Brexit Secretary's address to Austrian business leaders in Vienna is the latest in a series of speeches the UK government is calling "the road to Brexit" as it faces demands to spell out details of the future partnership it wants with the EU. Later this week, the ‘Brexit Cabinet’ is scheduled to meet at Chequers on Thursday to agree a line on Britain’s Brexit strategy. Theresa May plans to keep her cabinet ministers at Chequers until they have outlined a Brexit plan that includes a high level of alignment between EU and UK rules. 

 

The week ahead

Again today is relatively light on the ground from the fundamental data front, but with the US returning from President’s day we expect to see more movement in the market. German ZEW economic sentiment data is out this morning at 10am. An hour later, in the UK, the CBI Industrial Trends Survey is due before we head off to the EU this afternoon for preliminary consumer confidence figures for February. 

 

Thought of the day

Brit Watch. Today Mica McNeill and Mica Moore compete in the women’s Bobsleigh who, having eased through qualification, had a fairly turmoil start to their Olympic campaign. A bizarre overspend by The British Bobsleigh and Skeleton Association saw bosses controversially decide to axe all funding support for the women's programme less than six months before the Games. The pair were forced to rely on a crowdfunding campaign and raised more than £41,000 to ensure they were able to compete on the World Cup circuit and confirm their Olympic place. Those with a keen eye will notice the Micas proudly wear 'powered by the people' on the side of their sled and will be hoping to build on their impressive World Cup fifth place in November.

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