Sterling off its lows

The past couple of weeks have revealed that the Monetary Policy Committee of the Bank of England is split down the middle regarding the outlook for UK interest rates, between those who favour ‘no change’ and those who believe a near-term increase is warranted

The possibility that UK interest rates might rise sooner rather than later is providing some support to sterling in the  face of the relatively inauspicious start that has been made to the Brexit negotiations, with the EU making clear at the end of last week that Theresa May’s offer in relation to the rights of EU citizens in the UK did not go far enough.  Sterling has firmed to around 87.5p against the euro, from a low last week of over 88.5p. The single currency, meanwhile, continues to trade in a narrow range against the dollar (of around $1.1120 to $1.1220)

The composite PMI for the Euro area eased back in June according  to the flash reading published on Friday, though for the second quarter as a whole it was still ahead of its level in Q1 suggesting GDP growth in the zone remains relatively strong

Brent crude oil prices have regained some ground but at around $46 per barrel remain almost $10 below their level of a month ago – this will put downward pressure on headline inflation rates in the main economics in the short-term

Data due this week include final estimates of first quarter GDP in the US (Thurs) and the UK (Friday), while inflation data are also due in both (Friday).