Sterling slips again

Sterling has weakened further against both the euro and the dollar, to trade at 90.5p and just under $1.24 respectively, amid increasing concerns about the possibility of a ‘no deal’ Brexit – after the two contenders for the Tory Party leadership both said they would not accept the backstop – and despite stronger the expected UK labour market data published yesterday. The dollar  is a touch firmer against the single currency at $1.12, helped by strong retail sales numbers in the US, while core bonds yields are little changed

Retail sales in the US rose for a fourth consecutive month in June and for the second quarter as a whole were running well ahead of their level in Q1, suggesting consumer spending will make an important positive contribution to GDP growth in Q2

Notwithstanding the stronger US data, the Fed Chair, Powell, has again made the case for a cut in interest rates, citing on-going uncertainties facing the economy and below-target inflation

In the UK labour market, the unemployment rate dipped to 3.8% in the three months to May (from 3.9% in the three months to February) and the annual rate of growth in earnings (ex bonuses) picked up to a fresh cycle high of 3.6%, which will support consumer spending

Data due today include CPI inflation in the UK and housing starts in the US