Welcome to another week of fierce political debate, another central bank meeting and England finally performing in a major tournament. With the most important event of the day not kicking off until 19:00, focus will have to turn to the UK political situation to pass the time and the back and forth process of the EU Withdrawal Bill between the two houses of parliament which returns to the Lords today. With a decision still awaited on whether parliament gets a say on the final deal to leave the EU, strategists and investors will be scanning media reports for any hint that Prime Minister Theresa May is facing a leadership challenge as her party remains split over the so-called ‘meaningful vote’. On one side, Ms May has the EU is seeking to defend the 27 remaining members against British “cherry picking” during Brexit talks. On the other side is her own Conservative party, split into two factions. Eurosceptic Tories fear that they will lose out to the pro-EU wing, led by former attorney general Dominic Grieve. Some privately warn they could move to oust May if parliament votes this week to give itself the ability to force her back to the negotiating table, rather than allowing Britain to leave the EU with no deal. Although it’s unclear exactly which way these negotiations will go, sterling will likely be the main sufferer with uncertainty surrounding the outcomes of today’s votes and another in the Commons on Wednesday keeping the pound under pressure. At the time of writing GBP/USD is trading at session lows at 1.3242 while GBP/EUR has found support around 1.1440.

Other than Germany’s shock loss to Mexico yesterday they too will see politics dominate the headlines this week as Berlin’s crisis over migration policy enters a critical phase. Chancellor Angela Merkel’s interior minister, Horst Seehofer, is poised to hand her a two-week deadline to get an EU deal facilitating the return of migrants to countries in which they were first registered. If the Bavarian CSU does not agree to any compromise with Merkel’s CDU on migration policy, her current government may fall apart shortly while Merkel must also decide whether to sack Seehofer for insubordination and risk a rift with her Bavarian sister party. Although being dubbed Merkel’s worst crisis in 13 years by many press outlets, it is still unlikely this will be the end of Merkel’s reign as Seehofer himself has said “no one in the CSU has an interest in toppling the chancellor, in dissolving the union of the CDU-CSU or to break up the coalition”. The German chancellor will hold talks with Italian Prime Minister Giuseppe Conte in Berlin today before discussing migration with French President Emmanuel Macron during a joint cabinet meeting at a government retreat outside Berlin on Tuesday. Failure to reach a deal that can be presented as a breakthrough at a European level could precipitate a full-blown crisis in Germany that might topple Merkel after almost 13 years as chancellor. Her demise would likely further bolster authoritarian governments in Eastern Europe, undermine the new Spanish government’s humanitarian stance on migration and put at risk Macron’s plans for euro-area reform. After suffering heavy losses towards the back end of last week EUR/USD has found support in the high 1.15’s. 

Over in the Eurozone today, ECB President Mario Draghi is set to give the opening remarks at the ECB’s annual Sintra conference and will speak again tomorrow. Ahead of the June 28 EU summit, there is set to be meetings of both Eurogroup (Thursday) and ECOFIN (Friday). In terms of data, Friday sees the release of the flash PMIs as well as revised French Q1 GDP, while the preliminary Euro area consumer confidence will be published on Wednesday.

Closer to home and the main event will be the Bank of England meeting on Thursday, though we expect the majority of the Monetary Policy Committee (MPC) to vote for no change to rates. While there won’t be a press conference, Governor Mark Carney will deliver his annual Mansion House speech later that evening. We will publish our full MPC preview in the coming days. It is set to be quiet on the data front, with the main release being public sector finances on Thursday. Of course, Chancellor Philip Hammond will speak later on at the same banquet.

With all the focus on the World Cup and its thrilling start (I’m thinking Russia’s 5-0 win in the opening game and Ronaldo’s performance against Spain rather than Morocco vs Iran!) it’s easy to take our eye off other impressive sporting achievements. This weekend was certainly one of ‘doubles’ – the US Open Golf tournament was won once again by Brooks Koepka (his second US Open victory in a row), the Springboks came from behind again to win the second test match in Bloemfontein against England. That’s two wins in a row for the Boks and the series wrapped up (can you tell I am South African?) and Fernando Alonso won the Le Mans 24 hour race at the first attempt - he now has won 2 of motor racing’s triple crown (Le Mans, Monaco with just the Indy 500 left to conquer). This week in the UK there is also a big ‘double’ worth keeping an eye on – England, of course, open their the World Cup bid in Russia at 7pm against Tunisia (Come on England!) hopefully all of England rugby’s mojo has been loaned over to the football team for the month ahead! Then of course we have Carney and his MPC’s rate decision on Thursday! Whilst this is hardly riveting stuff, amongst all the sport that is going on, and there will almost certainly be no change to the bank rate; there will undoubtedly be clues as to whether rates in the UK may rise in August. Please speak to your Investec dealer today to get their views on the ‘doubles’ above, and as I said - “Come on England!”