GB Pound
What happened last week?
↓ A quiet week for the UK last week meant sterling traded rangebound Monday–Thursday before a choppy end to the week on the back of US Nonfarm Payrolls.
What to watch for in the short-term?
↓ After a couple quiet weeks on the data front, Sterling traders are looking ahead to unemployment and GDP data this week before the BoE’s interest rate announcement on the 19th. The Central Bank has been playing its cards close to its chest with regards to future interest rate cuts. However, with core inflation and employment continuing to cool, there is a chance we see a 25bp cut next Thursday. Nevertheless, market consensus still favours the November meeting for the next cut.
What about the coming months?
↓ With the all-important Autumn budget on the horizon, many are beginning to speculate about Rachel Reeves tax and fiscal plans.
Calendar
Tuesday 7am | Unemployment Rate (Jul)
Wednesday 7am | GDP (Jul)
US Dollar
What happened last week?
↓ Despite the 142k jobs added in Augusts Nonfarm Payrolls report coming in below consensus (160k), markets perceived the print as broadly dollar positive following July’s shock drop to 89k. More recently, Donald Trump announced his latest additions to his protectionist policies – a 100% tariff on countries abandoning the dollar.
What to watch for in the short-term?
↓ Using the NFP report as a bellwether for 50bp Vs 25bp cut from the Fed next week still leaves traders with mixed opinions. Hopefully, Wednesday’s inflation print will provide markets with more clarity on the path of rate cuts. On the Trump front – expect volatility in the dollar in Monday’s session as markets digest the news of more tariffs if Trump wins the November election.
What about the coming months?
↑ As Trump leans into more protectionist policies, the effect of a Republican election on the dollar are growing. Tomorrow’s first televised debate could push the needle on who’s the favourite going into November’s election.
Calendar
Friday 12.30pm | Nonfarm Payrolls (Aug)
Euro
What happened last week?
↓ Last week’s QoQ growth data came in slightly below expectations (0.2% Vs 0.3%) predominantly driven by German growth issues.
What to watch for in the short-term?
↓ Markets are expecting a 25bp cut from the ECB on Thursday and will be keenly listening to the accompanying statement from Madame Lagarde.
What about the coming months?
↑ As has been the theme of central banks over recent months, we expect little to 0 forward guidance from the ECB on Thursday. Madame Lagarde will likely point to medium term inflation targets and growth expectations. We expect GBPEUR stability over the coming months provided growth doesn’t deteriorate materially in Europe.
Calendar
Thursday 1.15pm | Interest Rate Decision
Call +44 (0) 203 884 992 to discuss further with an advisor.
Comments