Sunak makes a U-turn

Today's news headlines:

‘Rishi Sunak promises biggest income tax cut in 30 years’. Rishi Sunak has taken a U-turn on his fiscal policy stance by promising to cut the basic rate of income tax from 20% to 16%, a surprise move given his fiscal prudence during his time as Chancellor. With Liz Truss ahead in the polls, this move has been seen as a desperate attempt to win over members of the Tory Party. Sunak has warned that these cuts will only be considered once inflation is under control to prevent another rise in government borrowing. (Bloomberg) 

‘Bank of England set for biggest interest rate rise in 27 years’. The Bank of England is set to meet this Thursday, with markets assigning a 70% probability of a 50 basis-point interest rate hike, the largest for 27 years. The BoE expects inflation to reach 11% in October as energy prices are set to rise again, but there are concerns that a recession is drawing closer, leaving analysts concerned that a 25 basis-point hike may be more appropriate. (Bloomberg)


Today

Asian shares rose overnight despite growth concerns out of China as the Manufacturing PMI missed estimates. US equity futures are lower this morning while oil prices decline. The US Dollar has continued to pare gains while flows into the Japanese Yen continue. 

Events

China Caixin Manufacturing PMI (July): 50.4 (est. 51.5)
Germany Retail Sales m/m (June): -1.6% 
Eurozone Unemployment Rate (July): 10:00AM
US ISM Manufacturing PMI (July): 3:00PM
Canada Bank Holiday: All day


Interbank rates:

GBPUSD – 1.2190
GBPEUR – 1.1918
EURUSD – 1.0228
USDCAD – 1.2787

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