Category Archives: FX News

A Promising Week for UK Manufacturing, But Currency Volatility Looms

The week kicks off with the UK’s Purchasing Managers Index (PMI) report, with expectations of a rise in the manufacturing sector. The forecasted index of 52.5 signals positive growth, offering a boost of confidence in this vital sector.

The pound remains strong, sitting near its two-year high against the dollar. However, this stability could be tested in the coming days. With the Bank of England, European Central Bank, and Federal Reserve all expected to cut interest rates this month, we can expect heightened volatility in the currency markets. Such fluctuations could have a significant impact on major currency pairings, making it a critical time for businesses engaged in international trade.

As the week progresses, markets will closely watch key economic releases. The spotlight will be on the Eurozone’s Gross Domestic Product (GDP), a crucial indicator of the region’s economic health. This data will provide a clearer picture of the Eurozone’s performance and potential future trends.

In the US, the focus will shift to Friday’s Employment – Non-Farm Payrolls report. This highly anticipated report will give insight into the US labour market, offering key clues about the overall economic outlook.

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For expert guidance on how these developments could impact your business, or to seize opportunities in this volatile market, reach out to one of our specialists for tailored advice.

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.

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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.

This morning, Germany released its GDP data, revealing a modest year-on-year growth of 0.3%. While not dramatic, this increase signals a steady economic recovery that aligns with expectations for gradual improvement in the country.

UK Markets Quiet Amid Bank Holiday

In the UK, the week began quietly due to Monday’s bank holiday. With no economic data released, attention has shifted to currency movements, especially the British pound’s performance.

Pound Surges Against the US Dollar

The British pound has surged significantly against the US dollar, reaching levels not seen since March 2022. This rise reflects strong market sentiment and growing confidence in the pound, marking a notable recovery.

Pound Strengthens Against the Euro

The pound is also nearing last month’s highs against the euro. This consistent strength against both major currencies highlights the pound’s resilience and the positive outlook surrounding it. Investors are closely monitoring these movements as they signal broader market trends.

Interest Rate Expectations Drive Pound’s Strength

The pound’s recent strength is largely driven by expectations that the Federal Reserve will cut interest rates. The first cuts are anticipated as early as September, which has further boosted the pound. As global monetary policies evolve, the pound’s performance will remain a key focus for investors.

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For more insights on how these developments could impact your business, or to capitalize on market opportunities, reach out to one of our experts today. We’re here to help you navigate these market shifts.