Author Archives: Ricky Kielkowski

GBP/USD Selloff Continues Amid Recession Fears

The Pound to Dollar exchange rate (GBP/USD) has continued its decline as new US economic data signals a possible recession.

Dollar Rises as US Stocks Fall

The dollar gained strength while US stocks dropped in response to a risk-off reaction. A survey of US manufacturers showed the sector is stagnating, with rising pricing pressures.

US Manufacturing PMI Indicates Contraction

The ISM’s manufacturing PMI for August came in at 47.2%, below expectations of 47.5%. Any figure below 50 indicates contraction. This drop reflects renewed inflationary pressures, worrying markets about limited future rate cuts from the Federal Reserve.

Eurozone Inflation Data on the Horizon

In the Eurozone, producer price inflation is expected to remain sharply negative at -2.5% for July. This trend could further influence market sentiment in the region.

US Job Vacancies Expected to Hold Steady

The US JOLTS job vacancies report for July is anticipated to remain stable at 8.1 million. Barring any major surprises, this data is unlikely to have a significant impact on currency markets.

Stay Ahead of Market Volatility

For insights on how these shifts could affect your business, or to capitalise on market volatility, reach out to our experts today.

With U.S. markets closed yesterday, today’s focus shifts to the Purchasing Managers’ Index (PMI) for the manufacturing sector, due later this afternoon. Markets expect a rise to 47.5 signalling an improvement. While this is positive for the Federal Reserve, it remains below the 50-point mark that indicates growth.

As today’s U.S. data is the only significant economic release, attention will soon turn to the latter part of the week. The Non-Farm Payrolls report, the week’s most anticipated release is expected to show a recovery from last month’s weak numbers. This report will be crucial in shaping market sentiment and future policy decisions.

In the currency markets, the British pound continues to hold its strength against both the euro and the U.S. dollar. Despite economic uncertainties, the pound’s resilience underscores its stability in recent trading.

Investors and analysts will be closely monitoring these developments, as they could set the tone for the remainder of the month. Any surprises in the data could lead to heightened market volatility, particularly in the currency and equity markets.

As the week progresses, all eyes will be on the economic data, with significant implications for market movements and future policy direction.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.

House Prices Dip Amid Rate Cuts: What’s Next for the Market?

This month saw a slight drop in house prices, with a 0.2 percent decline—the first since April. Despite this dip, annual house prices are still 2.4 percent higher than they were in August last year.

Earlier in the month, the Bank of England reduced its base interest rate from 5.25 percent to 5 percent. As interest rates gradually fall, we could see house prices begin to rise again. Lower rates tend to encourage more people to enter the housing market, boosting demand and driving up prices.

Looking across Europe, markets are closely watching inflation data. Inflation is expected to move closer to the European Central Bank’s target of 2 percent. With German CPI showing a significant drop yesterday, the ECB may have little choice but to cut interest rates in their next policy decision.

In the US, the Federal Reserve’s preferred measure of inflation, the Personal Consumption Expenditure (PCE), is forecasted to rise by 0.5 percent, suggesting a potential increase in inflation.

Meanwhile, the pound surged against the euro yesterday, following lower-than-expected inflation figures from Spain and Germany. The GBP/EUR pair is testing a key resistance level as it holds near a two-year high.

Looking ahead, next week’s market focus will shift to German, French, and UK manufacturing data on Monday, followed by EU retail sales figures on Thursday. Friday brings a key update from the US with the latest employment and non-farm payrolls data, which could provide further market direction.

---

For tailored insights into how these economic trends might impact your business, or to capitalise on market volatility, don’t hesitate to get in touch with one of our experts.

US Consumer Confidence Surprises, But Will the Positivity Last?

Yesterday brought a positive surprise in the form of the Conference Board’s August survey on US consumer confidence. Expectations were low, but the index jumped to 103.3, up from July’s 101.9 and well above the forecast of 100.7. A pleasant surprise, no doubt, but there are clouds on the horizon. Signs of a weakening job market suggest this rebound in consumer morale may be short-lived.

On the currency front, it was a relatively quiet day for the major players. However, sterling continued its recent upward trajectory, showing resilience in the face of global uncertainty. The pound gained strength against the dollar, largely due to a surprising move by Federal Reserve Chairman Jerome Powell. In a shift that caught many off guard, Powell signaled his intention to cut interest rates in September—an unexpected turn that added some wind to sterling’s sails.

The Fed had previously taken a more cautious approach, signaling gradual rate decreases. But Powell’s recent speech felt like a “brakes off” moment, suggesting a more aggressive path forward. The market now sees a good chance that the Fed could kick off this cycle with a sizable 50 basis point rate cut—a move that was considered unlikely just days ago.

Looking ahead, today’s economic calendar is fairly light. The main release is Eurozone money supply and loan data for July, with the US macro diary notably quiet. With little in the way of market-moving data, today is unlikely to provide significant direction for the currency markets. All eyes will be on future developments.

For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.