- Posted by currencies in Bank of England, Brexit, Currency, Dollar, Economy, EUR, GBP, Sterling, UK, Uncategorised
- July 12, 2018
- No Comments
Today’s attention is likely to centre on the UK government’s publication of its Brexit White Paper following last week’s Chequers meeting.
The White Paper is expected to formalise the plan that ministers agreed last week and provide more detail on how the government intends to deliver on Brexit without crossing Theresa May’s red lines.
While the plans have already triggered a number of high profile resignations from the Conservative Party – including Boris Johnson and David Davis – the response of the European Union to the proposals represents the major hurdle for the UK.
Speaking late on Tuesday, German Chancellor Angela Merkel called the new proposals on maintaining a close relationship with the EU post Brexit a “solid step forward”.
Data-wise, today’s focus will be on the US CPI report. US inflation has picked up markedly this year and is expected to rise further over the coming months. While our US economist expects the uptrend to have paused in June, with CPI forecast to remain at 2.8%y/y, yesterday’s stronger-than-expected producer prices suggest that the risk of an acceleration in CPI remains high.
Elsewhere, Eurozone industrial production for May will provide further evidence on economic performance in Q2. Overall, GDP growth slowed to 0.4%q/q in Q1, after strong rises of 0.7%q/q through 2017. Based on available national releases we forecast Eurozone industrial output to rise by 1.2%m/m. That should reduce concerns of a further slowdown in Q2 GDP growth. Meanwhile the account of the last ECB monetary policy meeting is due at 12:30 BST.