During London trade on Monday, the Pound Sterling remained within striking distance of the recently struck 1-month trough after the Prime Minister hinted that it was his strong intent to increase investment in public infrastructure as an attempt to recover from the hard-hit economy which is struggling in the wake of the Coronavirus pandemic. He dismissed consideration of austerity measures saying that would be a mistake. Despite his assurances, FX traders are wary, especially given the absence of a trade deal with the EU; that lack of progress in the negotiations has weighed on Sterling. Tomorrow, GDP for the 1st quarter will be released and analysts are expecting it to be flat at -2%.
As of 11:25 am in London, the GBP/USD was lower at $1.233, down 0.0162%; the pair has ranged from a high of $1.23905 to a low of $1.23136 in this trading session. The EUR/GBP was higher at 0.9147 Pence, up 0.6226% and off the earlier peak of 0.91501 Pence.
Chinese PMI in Focus
In the short term, market attention will focus on PMI surveys out of China. The CNY Manufacturing sector PMI for June is expected to come in with a reading of 50.4, slightly lower than the previous 50.6 reading. Then on Wednesday, the Caixin PMI will be released, with analysts predicting a similar outcome with a slight drop in the reading to 50.5, from 50.7. Global markets are anxious to see how China is able to cope with the global pandemic, especially given its origination there. Also due out tomorrow is inflation data for much of the Eurozone. The preliminary EU composite reading is expected to show a decline in core CPI, with a reading of 0.8% for the month of June, falling from 0.9%.