Sterling was unable to make any headway after Tuesday’s European open and gradually lost ground during the day. Although equity markets opened higher, there was a deterioration in risk conditions with US equites moving into negative territory. The dip in confidence was significant in curbing Pound support. Scottish First Minister Sturgeon stated that the government will publish an independence referendum bill that will be consultative with a proposed vote in October next year. Sturgeon also stated that the UK Supreme Court will be asked to rule on whether a referendum vote would be legal without approval from the UK government. Although there are significant hurdles to overcome before any referendum, there will be increased uncertainty which also tended to curb Sterling support, especially with Brexit concerns. BRC shop prices increased 3.1% in the year to June and the highest reading since 2008 with Sterling able to hold in early Europe on Wednesday.
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14.00 Andrew Bailey Speech
ECB President Lagarde stated that the central bank will move gradually on raising interest rates if there’s uncertainty over the outlook, but with the option to act decisively on any deterioration in medium-term inflation, especially if there is a de-anchoring of inflation expectation. She added that the bank would act in a determined and sustained manner to tackle record inflation. The Euro struggled to gain support but did make limited headway on the crosses.
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13.00 German Harmonized Index of Consumer Prices (YoY) (Jun) Exp. 8.8% Prev. 8.7%
14.00 Christine Lagarde Speech
US consumer confidence dipped to 98.7 for June from 103.2 the previous month which was below expectations of 100.0 and the lowest reading since February 2021. There was a marginal decline in the current conditions index while there was a sharper retreat in the expectations component to the lowest level since March 2013 with increased concerns over the implications of high inflation. Consumers were still confident over the labour market, but expected conditions would deteriorate. The Richmond Fed manufacturing index dipped sharply to -19 for June from -9 previously and weaker than consensus forecasts of -4. There was also a very sharp decline in the reading for new orders while order backlogs continued to decline. There were still strong labour-market readings while inflation indices were mixed as cost pressures eased slightly, but prices received at a stronger pace on the month.
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14.00 Jerome Powell Speech