Risk traded well and the JPY weakened as investors await further details of a “comprehensive” and historic document signed by US President Trump and North Korean leader Kim Jong Un.
Given the number of issues (nuclear program, ballistic missile program, economic sanctions, etc), Barclays Research expect both parties to outline confidence-building measures for future talks, but stop short of any significant decisions. Investors await the press conference scheduled for 9am LDN for further detail.
GBP came under pressure after poor UK activity data, with GBP/USD falling to a low of 1.3345 after the release.
Industrial production contracted a sharp -0.8m/m in April; the weakest reading in a year. Manufacturing production was the main drag, contributing -1pp to the fall in IP; at -1.4% m/m and -0.5% 3m/3m, this is the sharpest decline seen since 2012. The Trade Balance also deteriorated sharply with export volumes falling by 6.1% m/m.
GBPUSD support now at 1.3345 ahead of 1.3200 with resistance at 1.3475 ahead of 1.3600 area. EURGBP testing top of the range at 0.8835-50 with support at 0.8750 ahead of 0.8690.
In the UK today, the EU Withdrawal Bill returns to the House of Commons where voting will begin on 15 amendments from the House of Lords. Focus will fall in particular on the meaningful vote, Customs Union and EEA membership amendments.
On the data front today, the key release is US inflation data. Barclays Research look for May CPI to rise by 0.2% m/m and 2.8% y/y, ahead of tomorrow’s Fed meeting.