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Threats on the horizon

Today's news headlines:

‘ECB’s Simkus Wants Half-Point July Hike as Option If Data Worsen’. Governing council member Gediminas Simkus has joined fellow European Central Bank colleague Martins Kazaks in arguing that a 25 basis point hike isn’t set in stone, and that the central bank must allow some flexibility if inflation data worsens. Economists predict that Consumer Price Index in the Eurozone will pick up to 8.5% for June. Simkus, the head of Lithuania’s central bank, commented that the ECB should move decisively toward monetary-policy normalisation with inflation becoming more broad-based. (Bloomberg)

‘UK Food Prices are Soaring and Plunging Millions Into Distress’. The British Retail Consortium said that soaring raw materials costs have caused some of the biggest price increases since September 2008. Fresh food led the surge with a 6% increase in the year to June. Poorer households are having to go without essentials, while falling behind on bills or going into debt, according to separate research by the Joseph Rowntree Foundation. The two reports will increase pressure on Boris Johnson to ease the cost of living crisis, with the squeeze threatening to push the economy into recession. (Bloomberg)


Overnight, markets moved broadly to a risk-off stance. Stocks mostly fell, and demand for bonds rose, with fears growing about the state of global economic growth and the need for monetary policy action in order to combat inflation. The US Dollar extended gains against the Pound and Euro. 


UK British Retail Consortium Shop Price Index: 3.1% vs 2.8% previously
German preliminary Consumer Price Index: Pending
Federal Open Market Committee member Loretta Mester speaks: 11:15AM
US final GDP: 1:30PM
ECB President Christine Lagarde speaks: 2:00PM & 4:00PM
Bank of England Governor Andrew Bailey speaks: 2:00PM
Federal Reserve Chair Jerome Powell speaks: 2:00PM
FOMC member James Bullard speaks: 6:05PM

Interbank rates:

GBP/USD – 1.2185
GBP/EUR – 1.1600
EUR/USD – 1.0500
USD/CAD – 1.2872

The markets are moving. To speak to our team, please call +44 (0)20 3465 8200.