A week for politics and policymakers

Today's Highlights

• Italian political shock to rock Eurozone

• Brexit hovering over markets

Current Market Overview

A time for politics and policymakers

It’s a quiet week for economic data again as we head towards the August Bank Holiday weekend, but there is plenty happening politically, and that’s more than enough to move the currency markets.

Central banks have also been in the spotlight again this week, with the Federal Reserve, European Central Bank, Bank of England and Reserve Bank of Australia all setting the scene for their interest rates and monetary policy approach ahead. And that approach is one of caution, as trade tensions escalate and fears of a global economic slowdown continue to travel.

Investors’ eyes now turn to the Federal Reserve’s meeting minutes this afternoon, as markets search for signs of future interest rate changes and the confidence of the central bank in the US economy. Any positive rhetoric from the meeting could boost the USD.

Italian political shock to rock Eurozone

The Eurozone received another significant blow yesterday, as its third largest economy was thrown into more uncertainty on the announcement of the resignation of the Italian Prime Minister. Italy’s political and economic woes will continue for some time to come, as the country waits to hear what happens next.

Brexit hovering over markets

The “B” word is also affecting Europe and the UK, despite the official parliamentary summer break. Ongoing political uncertainty from Brexit and international trade troubles continue to have a greater effect than data on the markets. Despite this, the Pound has held up relatively well over the past week, thanks to more encouraging economic data and some discussion about development in UK trade negotiations with a number of nations.

Right now, Sterling’s strength depends on developments from informal talks, as all eyes focus on the talks between UK Prime Minister, Boris Johnson, and Germany’s Premier, Angela Merkel. Will they come to an agreement on the Irish backstop? Is there room for compromise? Merkel’s so far positive comments have bolstered Sterling, as she reinforces commitment from the EU to address this big issue.

US data unlikely to make too much of an impact

Across the Pond, US residential sales figures will be released at the end of the week, expected to be positive. June’s results were on the up, with an increase of 7% from the previous month, so we are not expecting any big surprises for the July figures.