Euro softer

The euro is a little softer against the dollar this morning, trading just below the $1.12 level, as the ECB meeting later this week comes into focus, while sterling is largely unchanged against the single currency, at just under 90p, ahead of Boris Johnson’s expected confirmation as the new leader of the Tory party (and Prime Minister-to-be) later today

ECB “sources” stories doing the rounds yesterday suggested that the central back will signal at this Thursday’s meeting that a cut in interest rates is coming  i.e. at the September meeting, but will hold off for now from announcing any other monetary policy initiatives e.g. restarting quantitative easing (QE)

Bank of England member Saunders says the “underlying pace of growth (in the UK economy) is weak and below trend”, adding that “monetary policy could not prevent a no-deal Brexit being painful for the economy, for businesses and for households”

The market has been steadily pricing in the chance of a cut in UK interest rates over the coming months and now sees a full 25bps reduction by early 2020 at the latest

Data due today include consumer confidence in the Euro area and existing home sales in the US