020 7898 0500Sterling traded near its lows once again versus the US dollar and even fell below €1.10 against the euro following rising gilt yields and reports of disagreement between UK Chancellor Phillip Hammond and his cabinet peers. The Chancellor was excluded from a government meeting after his scathing remarks around the ‘hard’ Brexit that Prime Minister Theresa May has planned. Some news outlets have speculated that Hammond could even quit his post. The Treasury was quick to deny such speculation, but this did little to provide comfort to sterling.
Prospects of a ‘hard Brexit has already hurt sterling to the tune of 6% versus its major peers in the past fortnight, and yesterday’s market activity appears to be a continuation of current trends. Unless there is some type of U-turn on the terms of Brexit, where tighter immigration controls are favoured over free trade, there doesn’t appear to be much room for respite for the UK currency.
UK data releases are currently being discounted on the whole by the market, with Brexit continuing to take the limelight. However today we have the keenly watched inflation data being released, which is expected to be on the rise given sterling’s weakness. Tomorrow unemployment data and wage growth, an indication of the health of the economy, will be announced and then on Thursday the all-important retail sales figures are set for release. This is another key data point because consumer spending makes up roughly 70% of GDP.
