After its sharp sell-off in recent days, Sterling seems to have found its equilibrium, settling just above the 30 year low against the Greenback and two year low versus the Euro. The UK has lost its triple-A credit rating from S&P and Fitch, currently now at AA/negative. A rate rise this year has also been completely priced out of the US market, with some risk of an easing also priced. There is still a good chance we could see Sterling weaken next month, with easing expected at the next MPC meeting. Jeremy Corbyn lost the no confidence vote as 172 Labour MPs voted that they had no confidence in their leader. Despite only 40 MP’s backing him, Corbyn has refused to resign.
Across the pond, the US released their third and final GDP reading. The first-quarter GDP figure rose at a 0.8% annual rate, according to the second estimate from the Commerce Department, the weakest performance since the first quarter of 2015. However, the reading unexpectedly increased, beating economists’ consensus and registering at 1.1%.
The German CPI figure is forecast to slow slightly. CPI is forecast to continue to remain in positive territory at 0.1%. Today is the final day of the EU economic summit taking place in Sintra, Portugal. Fed chair, Janet Yellen and ECB President, Mario Draghi will both be attending this event. Any mention of the upcoming EU and UK negotiations will no doubt cause further volatility for the Pound.