Good morning all, I trust everyone had a great weekend! I know I did for two reasons; England’s route to the final just got a lot easier and it’s coming home!

Sterling recovered throughout Friday returning back above 1.3200 against the Dollar as the ONS’s third estimate of Q1 GDP growth saw it revised up to 0.2%, a beat on consensus expectations for it to remain unchanged at 0.1% but in line with our own forecast. Friday’s release included the annual Blue Book methodological improvements, which encompassed changes to the construction figures to account for downward bias in the early estimates. Resultantly, the Q1 fall in construction was a less severe -0.8% than the -2.7% initially estimated. This release should help to reassure the Bank of England that the Q1 slowdown was temporary and largely snow affected. Indeed, growth in the services sector strengthened to 0.3% month-on-month in April (from an upwardly revised +0.2% in March), providing further reassurance that the slowdown seen earlier in the year was largely due to temporary factors. Additionally, figures showed that the current account deficit had come in broadly as expected at £17.7bn (consensus £17.9bn, Investec £17.7bn). Separately, Bank of England data showed that the number of mortgage approvals for house purchase in May had come in at a higher-than-expected 64.5k (consensus 62.3k, Investec 63.0k).

In Asian trade Sterling has started to retrace as market sentiment swings back into retreat. Brexit headlines over the weekend make the chances of a UK-biased agreement with the EU unlikely; Brexiteers have to choose between economic security or UK sovereignty. As reported by The Times, Prime Minister Theresa May has begun to apply pressure to Brexiteer ministers within the parliament, as the odds of a successful deal with the EU leadership in Brussels are beginning to look grim. "Theresa May’s chief Brexit negotiator has told ministers that they have no chance of striking a bespoke trade deal with the European Union. Oliver Robbins briefed secretaries of state before their meeting at Chequers on Friday that they had to be realistic about what could be achieved. He is understood to have painted a bleak picture of the state of negotiations, telling them that Michel Barnier, his EU counterpart, was under no pressure from European leaders to soften his tough stance even though Mrs May had asked them to intervene.

Markets have witnessed a cautious start to a brand new week in Asia this morning, as the risk sentiment soured on fresh German political chaos after the country’s Interior Minister Seehofer threatened to quit, casting a cloud on Merkel’s future as the Chancellor. Reports suggest that Merkel has been scrambling to keep Germany's coalition government on the rails, but a growing rift between the two parties has continued to widen as disagreements over immigration have leadership coming to loggerheads, and Seehofer has been increasingly unsatisfied with Merkel's solutions. German media is reporting that the Christian Democratic Union (CDU), Merkel's main party, is deeply troubled by the news, and is looking to hold an internal vote on the matter, but will continue ahead with the migration pacts made thus far, and will continue to puruse deals with other EU partners. Germany's constitution prevents federal ministers from outright quitting their positions, and must request to be dismissed by the German President.

The risk-off tone persisted also due to a sharp sell-off in oil prices, as markets digested the weekend’s tweet by the US President Trump and amid prospects of higher output from Saudi Arabia. Over the weekend, US President Donald Trump tweeted that King Salman of Saudi Arabia agreed to increase oil production by 2 million barrels per day (bpd), "because of the turmoil & dysfunction in Iran and Venezuela", according to Trump's tweet.

The World Cup knockout stages are here and the drama continues. Yesterday we had two penalty shootouts with Spain going out to hosts Russia, the weekend’s major upset! On Saturday, France came back from 2-1 down to beat Argentina 4-3, with teenager Kylian Mbappe announcing himself on the world stage perhaps as the greatest young talent in the game. We also saw Portugal lose to Uruguay. This means the two best footballers in the world Lionel Messi and Christiano Ronaldo are now out of the tournament! If ever one needs proof that no matter how talented you are success is not guaranteed, unless you have the right team built around you. When it comes to your FX strategy, are you happy with the team you have built around you? Do you have the support you need? If not look no further! The Investec FX dealing team is here and ready to help. Our foundations have been built on teamwork and always being there to support our clients. If you try to take on all the FX hedging responsibility yourselves (akin to Messi and/or Ronaldo trying to win the World Cup themselves) you may fall short. Please don’t hesitate to contact us on 0800 055 6339, we’re perfectly positioned to take the weight off your shoulders.