Markets wait in anticipation of Brexit developments

Financial markets were allowed some respite on Tuesday, following the huge volatility seen after last week’s Brexit vote. Cable continues to recover from Monday’s low, and in doing so has allowed stock indices and other risk associated assets to do the same. Elsewhere it was a mostly range-bound session as traders now nervously await the next developments of the Brexit decision. Given the Leave campaigns unwillingness to release their plan, uncertainty is rife within the markets, and will continue to cause weakness until some form of proposal is released outlining the steps moving forward for the UK. In terms of data, the US Q1 GDP was revised up to +1.1%, but consumer spending remained weak, at 1.5% in Q1 from 1.9%.
 

Yesterday David Cameron addressed the EU summit, to bid farewell on a personal level as well as on behalf of the UK. The Prime Minister expressed his disappointment regarding the UK’s decision to leave, however reiterated that this decision was made by the British public, with the EU’s weak immigration policies at the forefront of their minds. He continued, noting that in order for the EU to prosper, it needed to rethink its control and free movement policies.

With David Cameron today returning to London, all eyes will be on the EU economic summit, where members will speak about the Brexit without having an elephant in the room. They are expected to talk openly, and action a plan moving forward without the UK. So, expect potential volatility of the pound throughout the day. Elsewhere, Germany releases June CPI figures and the July Consumer Confidence survey. In the US we have Pending Home Sales figures expected lower than previous, and personal expenditure figures month on month expected to come in higher at 0.4%.