Weekly Market Report

Last week’s dominant story was the collapse of the US-Iran ceasefire. Brent crude oil prices gained by around 5% for the week. The market was encouraged that technical peace talks would continue despite the renewed military exchanges.

Sterling had a better week despite geopolitical noise, with the unwinding of the UK political risk premium continuing to support the Pound. Fading uncertainty around the Labour leadership transition continued to support Sterling. Andy Burnham is set to be confirmed as Labour leader on 17th July and will formally become Prime Minister on 20th July.

FOMC meeting minutes from Fed Chairman Warsh’s first meeting, released last week, confirmed that nine out of nineteen members pencilled in a rate hike before the end of the year. As a result, the Dollar held on to some of it’s strength especially against the Euro.

US CPI inflation figures are due on Wednesday whilst UK GDP figures are due on Thursday morning – both of which will be closely watched.

What this may mean for businesses

US CPI data followed by Warsh’s speech 90 minutes later on Tuesday will be important. If core CPI holds at 2.9% and if Warsh strikes a hawkish tone then the Dollar could potentially see some strength. Businesses with USD payment may wish to assess current levels prior to Tuesday.

GBPEUR is the highest it has been in over a year. Businesses with Euro payments may wish to take advantage of this.

Sterling’s recovery seems to be driven more by political clarity rather than economic recovery. Burham’s government will likely face scrutiny early on on fiscal policy and approach to public finances.

We are seeing increased demand for short-term GBPEUR forwards and more enquiries for GBPUSD market orders.