Sterling sank towards a fresh six month low against the US Dollar this morning as both Prime Ministerial candidates in the UK raised fresh concerns over a ‘no deal’ Brexit.
The Pound received little help from this morning’s UK labour data, despite a bounce in earnings growth suggesting that the domestic economy was resilient in the face of Brexit uncertainties. Earning growth accelerated to 3.6% year-on-year in the three months to May excluding bonus and 3.4% including bonuses.
Remarkably, this is around the highest level in eleven years and remains one of the bright spots of the economy that could provide the Bank of England with reason to be slightly more hawkish at upcoming meetings.
More soft German data weighs on Euro
Some weak sentiment data out of Germany kept the Euro on the defensive this morning, which slipped to its lowest level in nearly a week. Both the economic sentiment and current situation indexes from ZEW came in worse than expected in July, the latter of which fell back into negative territory of 1.1.
Despite the generally torrid economic news out of the Euro Area, markets are not getting too carried away, given that the Federal Reserve looks all but certain to cut interest rates at its next meeting later this month. Fed member Evans has suggested in the last few days that the central bank may even need to cut rates on a ‘couple’ of occasions before the year is out.
Attention this afternoon will be on a number of other Fed member speeches, namely Bostic and Bowman. US retail sales could also prove a market mover when released at 12:30 BST.