Sterling remains under pressure, most likely due to political uncertainty and the lack of clarity surrounding Brexit. Both Boris and Jeremy Hunt have both said they are willing to leave with a no deal.
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The threat of a no deal will be used as ammunition to negotiate an improved deal with Brussels. The problem created by this is the higher the probability of a no deal the weaker you would expect sterling to become.
Some may consider that the appointment of a new Prime Minister may potentially cause a rally for the pound against the majority of major currencies as some sort of political stability is restored. Many are not so convinced, it could be seen that neither Hunt nor Boris have a definitive plan to secure the desired outcome for the British people, something the markets may have factored in.
The date set for the new PM to take over is 22nd July. They will have very little time to make any progress as parliamentary recess is due 25th July – 3rd September. Increasing the pressure to get a deal in place in a very short space of time which again heightens the chance of a no deal.
Today we will see the release of Consumer Price Index (CPI) data. CPI figures are a key measure of inflation and can influence future monetary policy and therefore the exchange rates.
Year on Year data is expected to remain the same at 2%, however month on month there may see a decline from 0.3% to 0.0% which could affect the pound.
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