Category Archives: FX News

GBP

The Bank of England will deliver another bumper 50 basis points increase to borrowing costs next month.

The Bank’s mandate is to have inflation at 2% and reach 11.4% in the fourth quarter, higher than the 10.2% predicted last month. BoE has said it would peak at 13.3% in October, the highest since 1980.
Soaring inflation largely driven by rising energy costs, alongside issues surrounding Britain’s departure from the European Union and disrupted supply chains exacerbated by Russia’s invasion of Ukraine, has led to a cost-of-living crisis.

Elsewhere, there are no major releases due for the UK Beyond today, however, it is a busy week for UK data releases with the latest labour market and inflation prints due early on Tuesday and Wednesday respectively.

s reached the highest level since November 2020 as energy shortages threaten to drive already record inflation higher still.

Inflation is now expected to average almost 8% in 2022 (Around four times the European Central Bank’s goal) and 4% next year.

USD

A key factor behind the improvement in risk appetite was inflation data from the US economy. The data showed an unexpected easing in inflation in July for both the consumer and producer sides of the economy.

This included the headline CPI rate falling to 8.5% down from 9.1%. Accelerating inflation from already elevated levels and the associated sharp rise in rates from the Fed has been a significant co ern to market sentiment since the start of the year.

The coming week sees a host of US economic activity data that will provide further insights into current economic conditions and whether GDP is likely to rebound in the second half of 2022 after falling in the first two quarters.

EUR

The risk of a eurozone recession has reached the highest level since November 2020 as energy shortages threaten to drive already record inflation higher still.

Inflation is now expected to average almost 8% in 2022 (Around four times the European Central Bank’s goal) and 4% next year.

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

The British Pound was supported near recent levels against both the Euro and Dollar this morning following the release of some better-than-expected UK GDP data that suggests The UK’s economy contracted by 0.1% in the second quarter.

In June, GDP fell by 0.6%, services fell by 0.5%, manufacturing by 1.6% and construction by 1.4%, the Office for National Statistics reported.

Nevertheless, the UK’s economic performance was worse in the second quarter than that of nations like Canada, Italy, France, and Germany, with underlying data showing that economic pressures were beginning to take hold on consumer spending.

USD

The past few days have seen some welcome news on the US inflation front. Most notably, on Wednesday, the latest US CPI print, saw the headline rate drop from 9.1% in June to 8.5% in July, softer than market expectations of a fall to 8.7%.

Later this afternoon, the University of Michigan will be releasing its preliminary estimate for July US consumer sentiment, which is forecasted to show a modest improvement from 51.5 in July to 52.0 The report will also provide a gauge on US consumers’ expectations for inflation 1yr ahead and 5-10yrs ahead.

EUR

In the eurozone, the latest industrial production report is due this morning. Already released regional reports from Spain, Italy, Germany and France have been better than expected and point to upside risks to the market consensus expectation of a 0.2% rise.

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

Today, The UK ministers will meet major energy firms amid a deepening energy crisis.

Chancellor Nadhim Zahawi and Business Secretary Kwasi Kwarteng will press gas and electricity company executives for solutions to the predicted spike in bills over winter.

The Bank of England expects a longer-lasting recession from the end of the year.

Rising energy costs are a key reason for the BoE’s significant upward revision of its inflation forecast. The BoE expects to get inflation back under control. However, everything depends on how the energy crisis in Europe develops.

USD

The key focus for markets yesterday was the US CPI inflation report for July. The data produced some surprises and generated a reaction across a number of markets.

The US inflation news coincided with some Dollar weakness. The greenback fell by over 1% in the immediate aftermath of the data release. However, it has recovered some ground overnight.

EUR

Nine Russian warplanes were destroyed in a deadly string of explosions at an air base in Crimea that appeared to be the result of a Ukrainian attack.

The destruction of Russian military aircraft in such numbers would represent a significant escalation in the war.

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 On the data front, UK retail sales climbed last month on the back of demand for summer clothing and picnic food during the hot weather, but the record high inflation is masking a much larger drop in volumes. Retail sales increased by 2.3% in July, ending three consecutive months of decline. However, the figures are not adjusted for inflation, which the BRC said was running among its at highest since 2008 as the cost-of-living crisis continues to hit UK households. Sales improved in July as the heatwave boosted sales of hot weather essentials. Summer clothing, picnic treats, and electric fans all benefited from the record temperatures as consumers made the most of the sunshine. USD In the US, the key release of the week will be tomorrow’s update for CPI inflation. Ahead of that, today’s releases are forecast to show a big fall in productivity in Q2, due to the combination of falling GDP and strong employment and a resulting large rise in unit labour costs. Meanwhile, the NFIB small business survey for July may provide insights into trends in a key segment of the economy. EUR Currency-wise, the action was uneventful against the backdrop of a sparse data calendar. This was evident in the majors being confined to narrow trading ranges throughout the day. This pattern has continued in overnight trading. Of the limited action to register, the euro has managed to edge slightly higher over the past 24 hours.

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.