Sterling witnessed a sudden drop after the events in Brussels, supporting the decision for the UK to leave the European Union. The Pound depreciated substantially against the majority of its counter-parties yesterday, as attacks in Belgium bolstered support for the “out vote”. UKIP Leader, Nigel Farage tweeted “Brussels, de facto capital of the EU, is also the jihadist capital of Europe”, campaigning that Britain will be safer leaving the EU. GBP/USD and GBP/EUR fell over a percent yesterday during the course of the day.
The economic docket was jam packed yesterday with high tier data released from both the UK and US. Firstly, UK CPI disappointed in the morning, missing expectations of 0.4% and registering a reading of 0.2%. However, core CPI which excludes the volatile energy prices remained at 1.2% year on year stabilising the Pound. Across the pond, the US posted its manufacturing PMI. Manufacturing in the States remained above 50, indicating expansion at a level of 51.4.
Another quiet economic schedule today with only New Home Sales released from the US. New Home Sales are forecast to rise to 75M from a previous 8M, a nine month high if met. An improvement on New Homes sold shows that consumer confidence is still relatively high, as consumers are still willing to borrow capital despite the recent rate increase from the Federal Reserve.