The pound stabilised on Tuesday in the wake of some hawkish comments from a Bank of England (BoE) policymaker.
Meanwhile, trade in the pound is mixed so far this morning, with GBP/EUR buoyed at €1.1832 and GBP/USD flat at $1.2199. GBP/CAD is rangebound at C$1.5552, while GBP/AUD and GBP/NZD slip to AU$1.7135 and NZ$1.8889, respectively.
Looking ahead, will a stronger-than-expected UK GDP reading offer some support to Sterling this morning?
The US dollar remained on the defensive yesterday, in response to a softer-than-expected US producer price index.
What’s been happening?
July’s index reported producer prices slowed to 9.8% year-on-year, while also falling 0.5% month-on-month in July, the first decline in over two years.
The surprise slump in PPI stoked speculation US inflation may have peaked. Leading the US dollar to drop as USD investors continued to scale back their expectations for the Federal Reserve’s next interest rate decision.
The continued downtrend in the US dollar, helped to underpin demand for the euro thanks to the negative correlation between the pairing.
However these gains remained capped in the face of ongoing European energy concerns.
Meanwhile, the pound stumbled on Thursday, with Sterling sentiment being sapped amid ongoing concerns over the UK’s economic trajectory.
Kicking off today’s session was the publication of the UK’s latest GDP figures.
What’s coming up?
According to data published by the Office for National Statistics (ONS) UK economic growth slowed from 0.8% to –0.1% in the second quarter.
Despite the contraction this beat forecasts that the economy would shrink by 0.2%, and so could offer some support to the pound today.
For EUR investors the focus will likely be on the Eurozone’s latest industrial production figures, with a slowdown in output at the end of the second quarter potentially dragging on the euro if it stokes concerns over the bloc’s factory sector.
Closing out the week will be the publication of the University of Michigan’s latest consumer sentiment index. Will another modest improvement in US consumer morale lend some support to the US dollar this afternoon?
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)