UK Government in turmoil following minister resignations; Fed determine to prevent prices becoming entrenched.
July 7, 2022
GBP/USD 1.1938 GBP/EUR 1.1722 EUR/USD 1.0184 USD/CAD 1.3015 EUR/CHF 0.9890 EUR/SEK 10.7416 EUR/NOK 10.3048 EUR/DKK 7.4410 USD/ILS 3.4953 AUD/USD 0.6811 NZD/USD 0.6170 USD/SGD 1.4021 USD/JPY 136.07 USD/CNH 6.7091 USD/INR 79.1363 EUR/ILS 3.5594 GBP/ILS 4.1725 USD/ZAR 16.8099
At time of writing, 53 government members have now resigned from Boris Johnson’s government, putting the prime minister in a precarious position. The internal conservative 1922 committee is said to be preparing a rule change to oust the prime minister after his narrow victory in last months no-confidence vote.
UK markets are shaking off the political meltdown, sterling trades up 0.22% against the dollar, and the FTSE has opened higher.EUR
Germany is planning cuts to unemployment support through 2023. Ireland’s Central Bank has raised its 2022 inflation forecast to 7.8% from 6.5%, citing rising energy prices.
The ECB is set to publish its June minutes today, with investors ready to analyse the rhetoric around the September rate hike, which is currently priced at 47 bps.USD
Last months FOMC minutes highlighted the Fed’s determination to continue hiking rates to prevent soaring prices from becoming entrenched, regardless of the impacts this could have on growth. Swap markets are currently pricing in a 0.71% rate hike at next months meeting.
Consensus sees Jobless claims at 230k and the May trade deficit narrowing to $84.7 billion.ASIA/PACIFIC
A potential disparity between China’s official GDP figures and high frequency indicators could question the accuracy of Beijing’s data. China is expected to report 2Q growth of 1.5%, however indicators suggest the economy could have contracted.
Sri Lanka raised its benchmark rate a percentage point to 15.5%, rates have risen 8.5% since the beginning of the year.ILS
USDILS trades 0.3% higher as we print, trading just below 3.5.Data & Events
BOE Decision Maker survey
US Jobless Claims
US Trade Balance
Trading in financial instruments may involve a high degree of risk and may not be suitable for all investors. Trading in financial instruments can result in both loss and profit. Investors should carefully consider whether financial instruments suit their needs, financial resources and personal circumstances.
The information contained in this material is solely for informational purposes only and it is not and should not be construed as an offer or a solicitation of an offer to buy or sell any financial instruments and cannot be relied upon as a representation that any particular transaction necessarily could have been or can be effected at the stated prices. This material does not contrue advice.
For more analysis on FX markets or information regarding SVB's FX services:
0800 023 1440 from within the UK
+44 207 367 7880 from overseas
See all of SVB's latest FX information and commentary.
© 2022 SVB Financial Group. All rights reserved. SVB, SVB FINANCIAL GROUP, SILICON VALLEY BANK, MAKE NEXT HAPPEN NOW and the chevron device are trademarks of SVB Financial Group, used under license. Silicon Valley Bank is a member of the FDIC and the Federal Reserve System. Silicon Valley Bank is the California bank subsidiary of SVB Financial Group (Nasdaq: SIVB).
Silicon Valley Bank is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. FC029579. Silicon Valley Bank is authorised and regulated by the California Department of Business Oversight and the United States Federal Reserve Bank; authorised by the Prudential Regulation Authority with number 577295; and subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details about the extent of our regulation by the Prudential Regulation Authority are available from us on request. Silicon Valley Bank is a subsidiary of SVB Financial Group, a Delaware corporation and is an affiliate of SVB Financial Group UK Limited. SVB Financial Group UK Ltd is registered in England and Wales at Alphabeta, 14-18 Finsbury Square, London EC2A 1BR, UK under No. 5572575 and is authorised and regulated by the Financial Conduct Authority, with reference number 446159. SVB Financial Group and its subsidiary Silicon Valley Bank are members of the Federal Reserve System and Silicon Valley Bank is a member of the FDIC.
Your eligible deposits with Silicon Valley Bank UK are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit guarantee scheme. Any deposits you hold above the limit are unlikely to be covered. Please click here for further information or visit http://www.fscs.org.uk. For more detailed information about coverage and limits, please review our FSCS Information Sheet at http://www.fscs.org.uk.
This material, including without limitation the statistical information herein, is provided for informational purposes only. The material is based in part upon information from third-party sources that we believe to be reliable, but which has not been independently verified by us and, as such, we do not represent that the information is accurate or complete. The information should not be viewed as tax, investment, legal or other advice nor is it to be relied on in making an investment or other decisions. You should obtain relevant and specific professional advice before making any investment decision. Nothing relating to the material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
Foreign exchange transactions can be highly risky, and losses may occur in short periods of time if there is an adverse movement of exchange rates. Exchange rates can be highly volatile and are impacted by numerous economic, political and social factors, as well as supply and demand and governmental intervention, control and adjustments. Investments in financial instruments carry significant risk, including the possible loss of the principal amount invested. Before entering any foreign exchange transaction, you should obtain advice from your own tax, financial, legal, accounting and other advisors, and only make investment decisions on the basis of your own objectives, experience and resources. Opinions expressed are our opinions as of the date of this content only. The material is based upon information which we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon as such.