17/07/2018 - May's Brexit Strategy in Disarray

GBP

Yesterday UK Prime Minister Theresa May's Brexit strategy was shown to be in dissaray after she infuriated pro-European Tories by bowing to pressure from their euroskeptic colleagues to re-write her plans. May's majority was cut to just three votes after she adopted Brexiteer amendments to a key piece of customs legislation following her tenth resignation since she revealed her Chequers agreement just over a week ago.

Scott Mann, parliamentary private secretary at the Treasury and MP for North Cornwall, handed in his resignation on Monday morning directly citing her direction of travel in negotiations as agreed recently by the Cabinet at Chequers. In a letter to the Prime Minister, he said: "I fear that elements of the Brexit white paper will inevitably put me into direct conflict with the views expressed by a large section of my constituents. I am not prepared to compromise their wishes to deliver a watered down Brexit“.

USD

US retail sales rose solidly in June, boosted by increases in purchases of motor vehicles and a range of other goods, cementing expectations for robust economic growth in the second quarter. The Commerce Department said on Monday retail sales increased 0.5 percent last month. Data for May was revised higher to show sales rising 1.3 percent instead of the previously reported 0.8 percent gain. May's rise in retail sales was the largest since September 2017. Excluding automobiles, gasoline, building materials and food services, retail sales were unchanged last month after an upwardly revised 0.8 percent increase in May. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Consumer spending is being driven by a tightening labor market, which is steadily pushing up wages. Consumption is also being supported by tax cuts and savings.

The International Monetary fund has warned that rising trade tensions between the United States and the rest of the world could cost the global economy $430bn (£324bn), with America “especially vulnerable” to an escalating tariff war. The IMF said the current threats made by the US and its trading partners risked lowering global growth by as much as 0.5% by 2020, or about $430bn in lost GDP worldwide. Although all economies would suffer from further escalation, the US would find itself “as the focus of global retaliation” with a relatively higher share of its exports taxed in global markets. “It is therefore especially vulnerable,” the fund said.

Key Announcements

09:00 - GBP: Bank Of England Governor Mark Carney Speaks
09:30 - GBP: UK Average Earnings (Excluding Bonus) May expected to fall to 2.7% From 2.8%
15:00 - GBP: US Fed Chair Jerome Powell Speaks