Tag Archives: USD

Market Watch: All Eyes on Europe’s Inflation Data and Fed Signals

As the trading week progresses, the markets are still grappling with the sluggish momentum carried over from yesterday. With limited economic data on the horizon, all eyes are turning towards Europe, where a key event is set to unfold. The spotlight today is on the release of the Consumer Price Index (CPI) at 10 AM UK time—a critical indicator that could have significant implications for both investors and policymakers.

Analysts are anticipating a slight uptick in inflation, with expectations for the CPI to edge up from 2.5% to 2.6%. While this may seem like a modest increase, the implications could be far-reaching. A higher-than-expected inflation figure might prompt the European Central Bank (ECB) to reconsider its current interest rate policy. If inflation continues to rise, the ECB could be forced to adopt a more aggressive stance on rate hikes, a move that would ripple through the markets and potentially set new trends in motion.

Meanwhile, across the Atlantic, market participants are already looking ahead to the end of the week, when Federal Reserve Chair Jerome Powell is scheduled to speak. Powell’s upcoming remarks are highly anticipated, as they are expected to provide crucial insights into the Fed’s approach to interest rates for the remainder of the year. With global markets on edge, any hint from Powell regarding the timing or magnitude of future rate cuts could be a game-changer.

On the currency front, the British pound has been making significant strides, showing remarkable strength over the weekend and into Monday’s trading session. This surge in the pound is largely attributed to robust UK economic data, which has bolstered confidence in the country’s economic outlook. As a result, the pound has gained nearly 200 points against the US dollar and 120 points against the euro, reflecting a wave of investor optimism.

For businesses and investors, these developments underscore the importance of staying informed and agile in a dynamic market environment. If you’re looking to navigate these market shifts or capitalize on potential opportunities, our team of experts is here to provide tailored insights and strategies to help you succeed.

---

Want to learn more about how these market movements could impact your business? Reach out to one of our experts today for personalized advice and guidance.

A quiet start to the week with no data due today across the board.

The pound benefited from positive data at the back end of last week and has since edged higher against both the euro and the US Dollar.

Since Friday, the pound has gained 2 percent against the US Dollar.

Its recovery has been helped by economic data highlighting a resilient labour market, more moderate than expected inflation pressures for July and a continued robust expansion of the economy for the last quarter.

The rest of the week is quiet until Thursday when we have the EU and UK PMI data followed by the US employment figures.

Bank of England governor Andrew Bailey will be speaking at the Jackson Hole Symposium on Friday; therefore, markets will likely look for any signals of any future interest rate cuts.

Despite the recent sell-off, GBP is the best performing currency in the G10 this year. 

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.

The UK Retail Sales report was released this morning, showing a 0.5% increase, up from -0.9%, as anticipated. This improvement reflects a positive shift in consumer spending, offering a hopeful sign for the economy.

Yesterday, the pound strengthened against all major currencies, buoyed by robust UK GDP data. This data highlighted the economy’s resilience in the second quarter of the year, contributing to the pound’s rise and reinforcing confidence in the UK’s economic stability.

However, the release of strong U.S. retail sales data also triggered a brief sell-off for the pound. Investors reacted to the positive U.S. economic indicators, leading to a temporary dip in the pound’s value.

Despite this setback, the pound quickly recovered its losses against the dollar. The swift rebound highlights the market’s confidence in the UK’s economic outlook, supported by the strong data released earlier in the week.

With economic data releases light today, market attention is expected to shift towards next week’s key data releases. The pound’s recovery against both the euro and the dollar underscores the significance of the robust UK economic data, enabling the currency to regain lost ground and maintain its momentum.

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.

Already released this morning, Pound Sterling has climbed against the other currencies in the G10 following Gross Domestic Product figures released by the Office for National Statistics. 

GDP increased 0.6 percent over the second quarter mitigating the risk of a recession – this is the second consecutive quarter of economic growth.

Manufacturing and industrial output both released above the market consensus and has highlighted a chain of positive economic reports from the UK, following the softer-than-expected CPI inflation print and fall in the unemployment rate earlier this week. Tomorrow investors will keep a close eye on retail sales data for July.

In the States, unemployment claims is expected to gradually rise to 235k. Later on today we have US retail sales, industrial production and import prices.

GBPUSD has been on an upward trajectory over the last few weeks, GBPUSD is currently trading at a 17-day high.

US inflation slowed to 2.9 percent in July, traders have reduced their bets of a Fed interest rate cut. Markets are pricing in a 55/45 chance that the Federal Reserve will reduce interest rates by 25-basis points.

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.

Inflation has risen for the first time this year, according to official figures, dealing a blow to Sir Keir Starmer after just one month in office.

The consumer price index (CPI) increased by 2.2 percent in July, up from 2 percent in both May and June, according to the Office for National Statistics. This was less than the 2.3 percent increase projected by analysts.

It is the first time CPI has risen since December 2023, when the Bank of England boosted interest rates to 16-year highs to reduce inflation, which peaked at 11.1 percent in October 2022 following a dramatic surge in oil prices caused by Russia’s invasion of Ukraine.

Yesterday, the key currency pairs remained within narrow ranges. Sterling began the day with some upward momentum following UK labour market reports (which revealed higher-than-expected job growth and a slowing of pay growth).

The main attention today will be on the US July CPI inflation statistics, which will be released this afternoon. The top line rate is predicted to remain at 3.0%, but the core rate is forecast to fall to 3.2% (from 3.3%). The numbers indicate some event risk for the dollar. Previously, the June CPI data was lower than expected, putting negative pressure on the currency.

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.