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What to watch

  • We have already received UK labour market data which was a little disappointing relative to consensus expectations, but still on the whole a strong report.
  • In terms of other data today we will receive the final print of Eurozone CPI alongside Eurozone construction data as well as US housing data (housing starts, building permits).
  • The focus on the UK continues with Mansion House due later - with speeches from both BOE Governor Bailey (which will be watched for any signalling of intent ahead of the August MPC meeting) and also from Chancellor Zahawi. The speech had been expected to see former Chancellor Sunak outline the vision for the City's relationship with the EU - but those details are likely to need to wait for the outcome of the Conservative leadership race.
  • In terms of the leadership race, the third round of voting will take place today, narrowing the field from 4 to 3. Note that after receiving 115 votes yesterday, Sunak only needs five extra votes to reach the 120 threshold required to progress to the run-off ahead of party members. There is a good chance that he exceeds that threshold today (although misguided tactical voting could also see a delay).
  • Mordaunt and Truss are expected to progress to the next round with Badenoch the most likely to be eliminated (as she is currently fourth in the standings). However, she is only 13 votes behind Truss and with the 31 votes Tugendhant achieved in the previous round up for grabs, it is by no means a certainty.

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