The risk-averse sentiment extended to currencies, with classic safe havens like the yen and Swiss franc gaining traction.
However, the dollar’s rise was limited by a lowering of US market rate expectations. Against this context, EUR/USD and GBP/USD traded in extremely narrow ranges yesterday.
This morning, the monthly reading of UK GDP for July was announced. The statistics came in below expectations, with output flatlining for the month compared to projections of a 0.2% month-on-month increase.
Pound sterling expressed frustration with the news that the economy did not grow in July.This means that the economy has failed to grow for two months in a succession, raising concerns about the UK’s growth outperformance compared to the Eurozone.
Later today, the spotlight will be on US CPI inflation in August. The headline rate is predicted to dip to 2.6% from 2.9%, with the core rate remaining at 3.2%. The release creates some event risk for the dollar.
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