Sterling continued its relatively tame fightback yesterday, pushing nearly 1% higher. However, the stand-off between the UK and Europe remains deep. Europe waited for the UK to formally trigger Article 50, the formal process to leave the EU, whereas the UK stated it will wait until a new prime minister is in place. This now appears to have been accepted by the EU. The contest for a new Conservative Party leader began yesterday. The bookies have backed Boris Johnson as the front runner, with Theresa May as a close second.
Across the pond, a Fed rate rise has now been pushed back by the markets. Markets suggest the next rate rise will be in January 31st 2018. Earlier in the week, Federal Reserve Governor, Jerome Powell, warned that global risks have shifted further to the downside since the UK stunned the world and voted to leave the EU. Economic markets are now pricing in an interest rate cut, rather than a hike for the rest of the year.
The weekly jobless claims figure from the US is released this afternoon, where economists will be watching to see if it can continue its good run of form. The UK current account is released early Thursday morning, with the figure forecast to narrow slightly to -28.1b.