Market eyes UK unemployment data

In the current climate sentiment is changing like the drop of a hat; the swings from risk on to risk off in sentiment are directly affecting the currency markets. Yesterday for the most part we saw little volatility in the FX rates, due to the previous days risk appetite sterling was trading higher and the Yen and the USD came under pressure. Yesterdays earnings results from Goldman Sachs were strong as anticipated but the price had already been factored in on the previous day…this led to a muted reaction on the results with shares only rising 0.2% on the news. On the currencies GBP/USD remained stalled at 1.63 and EUR/USD a shade under 1.40; later in the session Intel gave forecasts for the current quarter revenue which beat expectations and led to a burst of risk appetite and GBP/USD headed to 1.64 and EUR/USD to 1.4070.

Today in the UK we see the release of key data in the form of UK jobless claims and UK unemployment for June. The unemployment number will be closely watched following the weaker GDP data that has filtered through- it is expected in lower than previous at 7.4%. Later today we will also see industrial production data from the US which is anticipated to be a good number- if so this will fuel the risk appetite rally and see GBP/USD targeting 1.65 again. The pound and the euro have both gained against the USD and this has kept GBP/EUR steady at 1.1650- in the light of improved data yesterday from the UK the pound was only cautiously bought into.