Currency Update – Monday 28th July

It seems the UK really is in holiday mode now, judging by the lack of traffic on the roads this morning & the number of out of office emails going around. For those of us left helm it’s due to be a quiet week as far as UK economic data is concerned, with nothing out today to kick start the week.
Fridays Q2 GDP figures, whilst not recording a negative reading, the 0.2% growth points towards a sharply slowing economy, with the outlook for Q3, at best, signalling towards zero growth, which would end a long period of recorded economic growth, originating back in 1992.

Tomorrow we have more UK Housing data out with the BoE Mortgage Approvals, expected to show another fall, more of the same expected from the Net Lending Secured on Dwellings data. Also sentiment to the CBI Distributive Trades Report is anticipated to reflect last weeks fall in retail sales. All in all there is not much to give us any light relief from the grey clouds, that have become the UK’s constant companion this year.
The US left for the weekend on an positive note on Friday, after a good round of data, giving some strength to the Dollar, with an up-beat University of Michigan Consumer Sentiment Survey, stronger than expected New Home Sales for June & Durable Goods Orders. It is speculated that the US may be starting the long & slow road to recovery. This could then get investors looking for the next Fed interest rate move to be an upward one, which would give the Dollar further support.

Eurozone data this week has its focus mostly on the Inflation figures, released on Thursday, which is expected to show a rise, & remain a worry for the ECB, as the recent data points to a slowing economic environment, with further data published this week, expected to paint a similar picture.
Oil has remained steady over the weekend, with some in the market place speculating that the drop seen over the past couple of weeks, may have indicated that a peak had been reached & there could be further falls to come, with Lehman Brothers predicting a fall back below $100 a barrel in 2009. Obviously there is a long way to go before that would become a reality. But we can dream.