Morning Report

25 June 2021

“The pound fell after the Bank of England’s latest policy decision, in a largely kneejerk reaction, as the Monetary Policy Committee did not indicate a strong direction for the future. Progress on the infrastructure bill increased the appetite for riskier currencies, although anticipated US inflation data capped dollar losses.”

Sam Cornford, Partner & Head of Trading

Main Headlines

The Biden Administration secured a bipartisan agreement with senators on the high-profile US infrastructure bill worth $1tn. Lawmakers and the White House will now attempt to gain a broader coalition of support to move the bill and the Democrat’s broader economic package through Congress. The bill focuses on transportation, water and broadband infrastructure but will move in tandem with a larger Democrats-only reconciliation package containing tax and spending measures that Republicans oppose, meaning easy passage is far from certain.

The Bank of England has announced that inflation in the UK economy is likely to exceed 3% in the coming months but has sought to reassure the public that rising prices are only ‘transitory’. The statement from the central bank followed last week’s news that inflation was rising faster than previously forecast. The Bank’s Monetary Policy Committee signalled than it would wait for inflation to subside rather than move interest rates, voting unanimously to keep interest rates at 0.1% sticking with a loose monetary policy.


Sterling is weaker against most major currencies overnight. Kwasi Kwarteng, the Business Secretary is working with ministers to announce a ten-point UK innovation strategy to make the UK a global leader in the field of science and technology. Government expenditure will be channeled towards the formation of leading science schools, research and development, as well as improved access to private funding for tech-focused companies. Tourist destinations such as Spain’s Balearic Islands, Malta and Madeira have been added to the UK’s ‘green list’, removing quarantines for English people travelling to these destinations.


The euro is well bid against most majors in early morning trade. The EU is unlikely to grant UK-based financial firms automatic market access in all areas, according to UK Brexit minister David Frost, who argued that achieving equivalences in all areas is unlikely due to the recent downturn in relations between Brussels and London. At the EU Summit, leaders rejected an appeal from Germany and France to meet with Vladimir Putin. Merkel and Macron were handed a rare public defeat in Brussels after the plan was dropped from the EU Summit communique on the grounds that Eastern European member states would veto the proposal.


The dollar is higher the pound and lower against most majors overnight. The US Department of Commerce has banned imports of solar products from Xinjiang, as a further effort to take punitive action to signal opposition to China’s imposition of forced labour of Uyghurs in China’s Western provinces. Speaker of the House of Representatives, Nancy Pelosi, has announced that further efforts will be made to form a select committee to investigate the assault of the US Capitol building on January 6th. Senate Republicans blocked an earlier effort to establish a bipartisan independent commission.


Asian stocks rose Friday after U.S. shares hit a record on a bipartisan $579 billion U.S. infrastructure deal that stoked economic optimism. Oil hovered around $73. The gold spot price is at $1,777.68. Equities gained in Japan, China and Hong Kong. Australian shares weathered the imposition of virus lockdowns in parts of Sydney. European, S&P 500 and Nasdaq 100 contracts were in the green after both American indexes reached new peaks. Sectors seen as beneficiaries of the recovery from the pandemic, such as energy, led gains in U.S. hours, and banks rose in post-market trading after clearing stress tests. The benchmark 10-year U.S. Treasury yield hovered around 1.50%.

Main Economic Data/Central Banks/Government (All Times CET)

8:00 a.m.: Germany July consumer confidence

9:00 a.m.: Spain May PPI

10:00 a.m.: Euro-Area M3 money supply

10:00 a.m.: Italy June consumer confidence

11:00 a.m.: Italy sells bonds, linkers

12:00 p.m.: U.K. sells bills

12:30 p.m.: ECB’s de Cos speaks

2:30 p.m.: U.S. May personal income/spending, PCE deflator, PCE core deflator

7:00 p.m.: Baker Hughes U.S. rig count

EU leaders meet

Corporate Events

Earnings include Paychex, CarMax

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