The Euro fell by almost 1 per cent following dovish comments from European Central Bank (ECB) President Mario Draghi yesterday, 26 July. Despite leaving interest rates unchanged, Draghi stated the ECB would keep them on hold “through the summer” of next year. Market participants now expect a hike in September 2019, while the central bank will maintain its accommodative monetary policy.
In Brexit news, Michel Barnier rejected a key part of Britain’s proposal for future trade relationship. The European Union chief Brexit negotiator said, “The EU cannot and the EU will not delegate the application of its customs policy to a non-member who would not be subject to the EU’s governance structures”. This is a blow to British Prime Minister Theresa May’s new Brexit plan. Despite this, Barnier and Brexit Secretary Dominic Raab said progress had been made but “obstacles” remained.
Finally, today the focus is on the health of the US economy and GDP data due for release today at 13:30 (GMT). Economists forecast GDP would have grown by 4.2 per cent in the second quarter. However, above-expectations data will strengthen the Dollar further.