No Deal Likelihood Jumps

GBP

The likelihood Britain and the European Union part ways without a deal has jumped in the past month, according to economists in a Reuters poll, as most candidates jockeying to take over as Prime Minister appear to have adopted a hard line stance.

Boris Johnson has said he would be willing to leave the bloc without a deal, and the median forecast for the chance of a disorderly Brexit jumped to 25% in the June 11-14 Reuters poll, from the 15% given in May.

Johnson, is the current favorite to become the Prime Minister, began his campaign on Wednesday with a pledge to lead Britain out of the EU by October 31 no matter what happens. Johnson said he did not want a no-deal Brexit but he ruled out a further extension beyond the current October 31 deadline.

USD

The dollar strengthened late Friday as U.S. retail sales increased in May and sales for the prior month were revised higher, suggesting a pick-up in consumer spending that could ease fears the economy was slowing down sharply in the second quarter. The Commerce Department said retail sales rose 0.5% last month as households bought more motor vehicles and a variety of other goods. Data for April was revised up to show retail sales gaining 0.3%, instead of dropping 0.2% as previously reported.

Financial markets are currently pricing in two rate cuts this year, driven primarily by a recent escalation in the trade war between the United States and China, which economists have warned could undercut economic growth.

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