With U.S and British banks closed for holidays on Monday, the currency markets are having a quiet day. In North American trade, GBP/USD is trading at 1.3309, up 0.06% on the day. There are no British or U.S indicators on the schedule. On Tuesday, the US releases CB Consumer Confidence.
It was a disappointing week for the British pound. GBP/USD declined 1.2% and dropped below the 1.33 line for the first time since November. Investors have their doubts about a rate hike in August, and the BoE has done little to dispel these concerns. Last week, BoE Mark Carney was coy about future rate hikes, saying that “interest rates are more likely to go up than not, but at a gentle rate”. CPI, the primary gauge of consumer inflation, dropped to 2.4%, missing the estimate of 2.5%. This was the lowest rate of inflation since January 2017. If bank policymakers don’t feel confident about economic growth, the bank could remain on the sidelines in August, just as it chose to do at the May policy meeting. This could sour investor sentiment and send the pound lower.
The drama and uncertainty continue to swirl around the upcoming summit between President Trump and North Korean leader Kim Jong-un, which may or may not take place on June 12 in Singapore. Just a few days ago, Trump sent a letter to Kim, saying that Trump was canceling the much-anticipated meeting. However, the response from Pyongyang was restrained, and the White House has sent a team to Singapore in case the summit is back on. Meanwhile, the leaders of South Korea and North Korea met on the weekend. That meeting was completely unexpected and raises hopes of a breakthrough in the long conflict between the two Koreas.
