Currency Update – Monday

Currency Update – Monday

This week we have Rate announcements from the US, UK & Europe. All of which we expect a no change verdict,

The balancing act the MPC & ECB are currently concentrating on, leaves them torn between slowing economies, where a rate cut would be preferred, & rising inflation rates, which would benefit from a rate hike. As such a do nothing approach may be the preferred choice.

Reading the UK press this weekend, with their thoughts & opinions surrounding the MPC & Thursdays outcome,  there seems to be no majority consensus, with one broadsheet pointing towards a 25 bp hike & another pointing to a no change, but with a hike also possibility. Even though a hike is talked about as a slim possibility, the Market may be caught off guard, should this occur.

The Great British Pound came out of trading last week better than expected, considering the amount negative data surrounding the UK economy it had to contend with. However this week sees the release of further results from UK banks, which could put the pressure back on, with GBPUSD opening today below 1.97. With no UK data out today, the pound may struggle for direction.

On Friday US Non farm pay rolls came back better than the markets anticipated, giving the Dollar a boost going into the weekend. The data concerning the US economy has recently been swinging from positive to negative & has may on the back foot as to the next direction. The Factory Orders & Personal Spending figures released today may give stronger than expected readings & therefore more strength to the Dollar.

UK data releases start tomorrow with July Service Sector PMI, Industrial & Manufacturing figures. All figures are expected to highlight a weakening economy & show any export competitiveness gained recently via a weaker pound to be offset by a fall in domestic demand.

Hazel Wilkinson | Treasury Solutions | nabCapital

No Comments

Post a Comment