Sterling dropped to another low this morning, hitting its weakest since March 2017 as investors grow increasingly worried that Britain is headed towards a disorderly exit from the European Union without a transition deal.
Senior ministers said on Sunday that new Prime Minister Boris Johnson’s government was working on the assumption that the EU will not renegotiate its Brexit deal and is ramping up preparations to leave the bloc without a deal on Oct. 31.
An opinion poll also showed Johnson’s Conservative Party has opened up a 10-point lead over the opposition Labour Party, fuelling speculation that Johnson will call an early election.
The U.S. Federal Reserve is widely expected to cut interest rates for the first time in more than a decade this week, but such a move is widely seen as a pre-emptive one to protect the economy from global uncertainties and trade pressures, in contrast to some other countries that face more imminent risks.
What everyone is interested in right now is whether the U.S. will enter a full rate-cut cycle. The GDP figures were a bit stronger than expected, putting a dent to the view of the U.S. entering a long easing cycle.
U.S. gross domestic product increased at a 2.1% annualised rate in the second quarter, above forecast of 1.8%, as a surge in consumer spending blunted some of the drag from declining exports and a smaller inventory build.
The European Central Bank signalled last week that it is likely to cut interest rates deeper into negative and adopt more easing measures in September to shore up the sagging euro zone economy.
An opinion poll also showed Johnson’s Conservative Party has opened up a 10-point lead over the opposition Labour Party, fuelling speculation that Johnson will call an early election.