Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

The pound is under the cosh this morning as another bout of Brexit jitters grip the financial markets.

After a nervy selloff yesterday, sterling is suffering again this morning. It is languishing below the $1.24 mark at just $1.2389, its weakest point since early April 2017.

The pound vs the US dollar over the last two years

The pound vs the US dollar over the last two years Photograph: Refinitiv

Arjun Lakhanpal, MSTA, CFTe

Fears over the chance of a no deal exit weighing on the Pound. Sterling plunged to lows last traded more than two years ago as it broke below 1.2400 briefly.

July 17, 2019

It’s also struggling against the euro, having dropped to just €1.1056 for the first time since January.

Anxiety over a no-deal Brexit has risen, after both Boris Johnson and Jeremy Hunt vowed to ditch the Northern Ireland backstop – something Europe has rejected several times.

News that Johnson could schedule the next Queen’s Speech to ensure Parliament was shut before the 31st October Brexit deadline is also worrying investors.

The established view in the City had been that a no-deal Brexit was unlikely, and that a further delay, perhaps accompanied by a general election, was on the cards. The prospect that the next prime minister might slam his foot down on the no-deal accelerator is making traders rethink.

Stephen Innes of Vanguard Markets says sterling could easily suffer further losses:

With markets still underestimating a hard Brexit and a potentially dovish Bank of England the Pound will remain extremely vulnerable in a dynamic shift to a ‘no-deal’ stance from Brussels before the autumn.

David Lowe, head of international trade at law firm Gowling WLG, is also concerned:

“A Boris Johnson proposal to scrap the Irish backstop has a high chance of being rejected and not seen by the EU as a good reason. And then the UK risks stepping off into the unknown of a no-deal Brexit on Halloween.”

Neil Henderson

FINANCIAL TIMES: Sterling plunges to 2 year low on mounting risk of no deal Brexit #tomorrowspaperstoday

July 16, 2019

Also coming up today

The latest UK inflation data is released this morning, showing how the cost of living keeps rising.

Economists predict consumer prices rose by 2.0% year-on-year in June, as in May, and bang on the Bank of England’s target. If so, that would mean earnings are still rising faster than prices [ we learned yesterday that wages are rising at 3.6%].

But despite wages picking up, UK households’ incomes have just suffered the weakest growth outside of recessions since records began in 1961, according to the Resolution Foundation.

We’ll also check out the latest official house price data – likely to show a slowdown, led by London and the South East.

The markets may be subdued, as anxiety over US-China trade talks weighs on shares.

The agenda

  • 9.30am BST: UK inflation data for June – CPI expected to be unchanged at 2.0%
  • 9.30am BST: UK house price house data for May – nationwide growth tipped to drop to 1.3%, from 1.4%
  • 1.30pm BST: US housing starts and building permits reports


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