There seems to be no winner in current British politics, but there definitely is one loser – the pound. GBPUSD falls for the sixth consecutive trading day and now sits at levels not seen since mid-February. The cause; further political anguish. Sterling’s fall also led to the longest unbroken rally in EURGBP since 2000. Yesterday, following a lengthy meeting between the backbench 1922 committee and Prime Minister May, headlines flashed across traders screens that a formal resignation date for the Prime Minister – in the likely event that the Withdrawal Agreement is rejected in June – would not be released. Not just yet anyway. However, after the 4th vote on the Withdrawal Agreement ends, May will meet with the backbench committee to set a formal departure schedule such that a new Conservative party leader can be announced. The timeline is dictated not only by the status of the Withdrawal Agreement’s progress but also by the upcoming Tory party conference. With in house procedures to elect a new leader expected to take around 6-weeks, the timeline is tight to get a new leader in place by the September event. This morning, UK newspapers are centering around yesterday’s 1922 committee, with former Tory party leader Iain Duncan Smith urging for a resignation from May before the summer recess in late July. A lack of UK data this morning means politics will likely dictate sentiment again. Cross-party talks are reportedly continuing despite heightened speculation that negotiations are close to collapsing.


Eurozone’s growth engine may be firing up with 0.4% growth in Q1, but cars are still reluctant to roll out of the showrooms en masse, this morning’s Eurozone New Car Registrations signal. Eurozone Car Registrations declined by 0.4% year-on-year, putting the 8th consecutive monthly contraction on the boards. This suggests the recent acceleration of economic growth and the Eurozone real wage increases have yet to convince Eurozone consumers now is the moment to purchase a big ticket item like a car. Meanwhile, US Commerce secretary Wilbur Ross has said that Trump has a “range of alternatives” on auto tariffs, indicating the reprieve from this threat to Eurozone growth may be short-lived. This is bad news for the Eurozone car sector, as domestic, as well as foreign demand, appear to be under pressure. Today sees the Final Consumer Price Index of April released at 10:00 BST, while Finance ministers meet all day in Brussels


The greenback had a strong performance yesterday on which it all came together; solid US housing data, combined with demand for safe-havens after China showed little appetite for further trade talks. The Chinese blamed the US of using “petty tricks” and a “lack of sincerity” in trade talks, and state media reported it may be better to suspend the consultation completely and simply return to the normal working track. China took specific offend of the measures taken yesterday against Chinese technology giant Huawei, even after China showed goodwill by sending its Vice-Premier Liu He to Washington for trade talks. The latter despite the increase of tariffs from 10% to 25% on $200 billion worth of Chinese goods by Trump earlier last week. The hardening of stances by both sides can be seen as par for the course of such a negotiation process, however, markets for now are starting to get squeaky about the potential of a complete breakdown in talks. This likely played a role in the haven flows that streamed into US treasury markets yesterday, which drove yields on 10-year US debt papers close to levels not seen since December 2017. Today brings us the University of Michigan Consumer sentiment at 15:00 BST, which can tell us more about the lower consumer inflation expectation that the Federal Reserve looked through during its last meeting.


The loonie had a good day yesterday, rallying to a fresh high for the week against the US dollar after strong Manufacturing Sales data. But momentum reversed overnight, and a strong emerging bid for the US dollar sent the loonie back to where it started overnight. Crude oil prices rallied throughout the day however. The Bank of Canada’s annual Financial System Review was released yesterday and was largely beside the point for loonie, with most headlines focussing on the fact that the report focussed on the threat climate change poses to the financial system.