Category Archives: FX News

GBP

The Bank of England has warned that Britain is likely to slip into a recession at the end of 2022 which will last until 2024, as soaring energy bills, mostly due to Russia’s invasion of Ukraine, could push consumer price inflation above 13% in October.

In exactly 14 days, the UK’s new prime minister will walk into Number 10 Downing Street to take office as the 56th prime minister of the UK and start their time at the helm of the country.

The Conservative Party membership, estimated to be around 160,000 – have until Friday 2 September to cast their votes with the winner to be announced at the 12.30 pm ceremony on Monday 5 September.

USD

The Dollar continued to hold the upper hand on the exchanges yesterday. This was against the backdrop of a distinctly risk-averse tone and the dollar safe haven appeal once again outweighed relative moves in interest rate differentials.

The Dollar’s ongoing dominance was evident in the EUR/USD pair testing below parity which continued overnight.

EUR

Business activity in the eurozone contracted for a second straight month in August as the cost of living crisis forced consumers to cut spending while supply constraints also hurt manufacturers.

S&P Global’s flash Composite Purchasing Managers’ Index (PMI) (seen as a good guide to overall economic health) fell to 49.2 in August from 49.9 in July.

A reading below 50 indicates a contraction and August’s preliminary estimate was the lowest since February 2021. 

If you or your company are impacted by currency risk please reach out to speak to one of our experts, we can assist with decision-making during this difficult time to help you protect your profits.

GBP

As we approach the end of August, the UK economic calendar is set to enjoy a subdued week. Over the course of the week, there is only one high-rated data release.

The UK PMI data tomorrow which will be closely watched after the Bank of England warned earlier this month of a 15-month recession starting from the end of this year.

USD

USD strengthens against the GBP as the UK consumer confidence score remains at a historic low due to soaring food and fuel prices and rising interest rates.

This week’s highlight includes the Jackson Hole Economic Symposium which is an annual central banking gathering.

Remarks from US Fed Chair Powell on Friday will be closely analysed as markets assess the outlook for monetary policy The message from Powell will probably be hawkish with the near-term priority to tackle high inflation. A further rise in US policy interest rates of 50bp or 75bp is expected next month.

EUR

The euro briefly fell back below parity against a robust dollar this morning and was languishing at five-week lows, weighed down by concern that a three-day halt to European gas supplies later this month will exacerbate an energy crisis.

German IFO business survey and the published minutes of the ECB’s July policy meeting when it raised interest rates more than expected by 50bp both are due on Thursday.

If you or your company are impacted by currency risk please reach out to speak to one of our experts, we can assist with decision-making during this difficult time to help you protect your profits.

GBP

Surging UK inflation has undermined the UK’s economic growth prospects, and this will weigh on the British Pound going forward.

The UK reported year-on-year inflation leapt to 10.1% in July, which was higher than investors were expecting and suggests the country is now well on track to meet the Bank of England’s prediction for inflation to peak near 13%.

Tomorrow’s UK consumer confidence and retail sales data will provide further evidence on the impact of the ongoing cost of living squeeze.

USD

Data-wise, the headline number for July retail sales missed slightly versus forecast. However, the underlying data indicate a solid start to Q3 for the all-important consumer side of the US economy.

Meanwhile, the release of the Fed minutes from their July meeting (when they hiked rates by 75bps) was closely followed by markets.

Overall, the minutes highlighted that the extent of the next rate hike will be very much data-dependent. Futures contracts suggest the market is pricing at least 50bps of a rate hike from the Fed next month.

EUR

Today’s Eurozone CPI data for July is a second reading. It is not expected to be revised from the initial estimate of 8.9% – a new record high.

This provided support for the ECB’s decision to opt for a larger rate increase last month rather than the expected move of 25bp. It also highlights the dilemma that the ECB faces in deciding how much to raise rates in September in the face of rising growth risks. 

If you or your company are impacted by currency risk please reach out to speak to one of our experts, we can assist with decision-making during this difficult time to help you protect your profits.

GBP

Released earlier this morning UK labour market data showed employment growth of 160k in the three months to June. 

The unemployment rate of 3.8% in the three months to June was unchanged from last month’s report, close to a half-century low despite Bank of England warnings that the economy is likely to slip into recession later this year.

However, there were hints that the tight labour market is starting to turn with job vacancies easing further away from their recent highs

USD

There was some disappointing market data from the US economy yesterday, although it was not in the form of any top-tier data. Both the regional Empire manufacturing and homebuilder sentiment surveys for August missed the downside of expectations.

July data in the US are forecast to deliver mixed messages on economic activity. Housing stats are likely to have fallen for the fourth successive month reflecting the impact of higher interest rates, but industrial production may have risen.

EUR

The German ZEW survey will provide one of the first updates on August economic trends in the Eurozone. 

The latest readings are expected to show both current conditions and expectations at close to recent lows reflecting ongoing uncertainties not least the potential impact of higher gas prices. 

If you or your company are impacted by currency risk please reach out to speak to one of our experts, we can assist with decision-making during this difficult time to help you protect your profits.