Merkel Tells UK No 'Cherry-Picking' in Brexit Talks

Starting today’s report with an important quote “Whoever wants to leave this family cannot expect to have no more obligations, but to keep privileges,” German Chancellor Angela Merkel said yesterday.

Merkel also said, “Some countries in the European Economic Area, but outside of the EU, such as Norway and Iceland, have access to the single market, but they must accept freedom of movement.” Overall, such statements could increase concerns about the European partnership negotiations with Britain.

On Tuesday, GBP recovered vs. USD and traded at $1.34. From a technical point of view, the pound is likely to continue its volatility, but may not be able to trade above $1.35 during the coming period. 

The U.S. dollar index fell by 50 pips during yesterday’s trading session and settled above 96 levels. The U.S. GDP expanded at an annual rate of 1.1% in the first quarter, compared with a previously estimated gain of 0.8%, the Commerce Department said yesterday.

On Tuesday, European Central Bank President Mario Draghi told EU leaders that UK’s decision to exit the European Union could reduce euro zone growth by a cumulative 0.3 to 0.5% over three years. Euro traded below $1.11 vs. USD and could decline to $1.10. The major resistance areas are expected to be at 1.0960 levels.

Gold pared its gains, trading at $1,310, and could decline to the psychological level of $1,300.

Oil prices rose on Tuesday, thanks to the Norway strike threat and could settle at $47.50.

The most important economic events:

• EUR German Consumer Price Index (YoY) (JUN P): (GMT 14:00) – Important – Forecast (0.3%) - Previous (0.1%)
• USD Personal Consumption Expenditure Core (YoY) (MAY): (GMT 14:00) – Important – Forecast (1.6%) - Previous (1.6%)

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.