Down to the final ten
Ten Tory leadership hopefuls are still in the running to become the next Prime Minister. Many will launch their campaigns today, announcing further plans and policies should they win the top job.
The bookies’ favourite Boris Johnson yesterday proposed a tax cut on those earning over £50,000 a year, Michael Gove announced plans to scrap VAT and replace it with a sales tax, while outsider Rory Stewart has expressed doubt over his oppositions’ spending pledges, labelling some as ‘cheap electoral bribes’.
These pledges and proposals over spending and taxes are expected to be delivered alongside more-detailed Brexit strategies over the course of the coming days, as the uncertainty over the next PM to lead the UK through an uncertain Brexit continues.
This lack of clarity applied further pressure to the pound, as did a ‘dramatic’ fall in car output that slowed economic growth for the three months to April to 0.3%. All of which contributed to a further slide for sterling against the euro and the US dollar in the build-up to today’s Average Earnings Index, which is predicted to register a moderation in the pace of wage growth.
Trump tariffs tiffs
Following the signing of a deal with Mexico, allowing them 45 days to reduce the number of US-bound migrants, President Trump again used the threat of a tariff imposition to reinforce his political agenda, this time back onto China and the ongoing trade war.
Tariffs of 25% or ‘much higher than 25%’ on $300bn of Chinese goods were suggested by Trump should President Xi Jinping of China refuse to meet him at the upcoming G20 summit in Japan. The two are set to meet again following escalations from both sides on the trade war since negotiations broke down last month.
Despite the President moving for checkmate and a profitable resolution with both Mexico and China, USD is still forecast lower as expectation for the Federal Reserve interest rate cuts continue to rise.
President Trump also expressed his concern over whether the mega UTC-Raytheon merger would remove competition within the aerospace and defence industry.
Europe waits for Draghi
European parliaments were back open for business after a number of bank holidays across the continent yesterday, but it looks like it’s going to be another relatively quiet day for the euro, with only the Sentix Investor Confidence data making any difference. The research group showed that investor confidence in the EU deteriorated sharply in June, in part due to the trade war between the US and China. Sentix reported a score of -3.3 versus the expected 2.5.
Market news to stay tuned for is ECB President Draghi’s speech tomorrow, but with the meet so close to last week’s, predictions are that it won’t impact on currency quite as much as usual. It’s expected that Draghi will expand on his stance from last week, where the euro rallied after the ECB displayed a more subdued tone. Many are looking for signs they could be about to cut interest rates further.
Other key news further afield to look out for include RBA Assistance Governor Kent’s speech and reaction to Westpac’s Consumer Sentiment, both of which take place later tonight and are key to the Aussie’s value.