Watch out Rishi

Today's news headlines: 

‘Top Tories warn Johnson against demoting Sunak’. Reports have circled over the weekend that the UK Prime Minister Boris Johnson has threatened to demote his Chancellor Rishi Sunak after tensions rose over plans for spending and taxation. Johnson is keen to bolster the purse strings of the NHS whilst tackling regional inequalities, but Sunak wants to moderate spending as the UK’s debt stands at 2.2tn, the highest level since the 1960s. Senior MPs have warned the PM that any attempt to move the chancellor would likely backfire, given his popularity in the party and wider reputation for competence. (Financial Times)

‘ECB’s Weidmann Warns Inflation May Pick Up Faster Than Expected’. European Central Bank member Jens Weidmann has delivered a warning on the state of Eurozone inflation, urging the organization not to prolong its bond-buying program. The ECB expects inflation to hit 1.9% in 2021 before falling in 2022 and 2023. However, Weidmann—who is also the head of Germany’s Bundesbank—will urge the bank to keep an eye on the risk that inflation rises above the 2.0% level following increased stimulus. (Bloomberg)


Today

After Friday’s bumper Non-Farm Payroll number, markets are expecting some level of Federal Reserve tapering later this year. This led to an overnight fall in precious metals, with Gold and Silver touching lows last seen in March and November respectively. Elsewhere, the US Dollar index held steady while US and European equity futures both dipped around 0.2%.

Events

German Trade Balance: 13.6B vs 12.6B previously
Federal Open Market Committee member Bostic speaks: 3.00pm
FOMC member Barkin speaks: 5.00pm

Interbank rates:

GBP/USD: 1.3885
GBP/EUR: 1.1805
EUR/USD: 1.1765
USD/CAD: 1.2555

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