• Audere Research

Weekly FX Outlook August 31st


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GB Pound


Sterling re-gains ground against the Dollar


Movements

GBPUSD opened at 1.3639 and edged higher, pairing all losses from last week and closing with a weekly gain of 1.18% at 1.3800.


GBPEUR opened at 1.1646 and traded rangebound, fluctuating between 1.1640 and 1.17, to close slightly higher (+0.17%) at 1.1665.


Movement rationale

Last week generally lacked any major UK economic data, with the exception being PMI figures, revealing that Britain is slowing its post-pandemic economic recovery and casting some doubts over the outlook. However, the Pound was unreactive to the data release, as investors concentrated their focus on COVID-19 figures and waited for the Federal Reserve's annual symposium on Friday to derive some insights on USD. Whilst Sterling overall showed little movement against the Euro, it rose sharply versus the Dollar to hover near a 1-month high, as the Greenback saw heavy losses across the board.


Week ahead

A light UK economic data calendar includes the following:


Calendar

Wednesday 9:30am | Markit Manufacturing PMI (Aug)


US Dollar


The Dollar was weak.


Movements

EURUSD began the week at 1.1712 and steadily edged higher, traded back above the 1.18 level for the first time in 4 weeks and closing at 1.1829 (+1%).


GBPUSD opened at 1.3639 and edged higher, pairing all losses from the previous week and closing with a weekly gain of 1.18% at 1.3800.


Movement rationale

The Dollar lost momentum, closing near a 2-week low versus major peers and hitting a 1-month low against Sterling. During the first part of the week the Greenback fell amid optimism that the Delta variant will not derail the global economic recovery. The focus then turned to Jackson Hole, where Fed Chair Jerome Powell deliveed a dovish speech, offering no clear signal on tapering. The lack of clarity disappointed investors, who expected tapering to start in October, and triggered a further sell-off on Friday. Some positive data did little to support the Dollar. The initial US GDP estimate for Q2 was revised slightly up, recording annualised growth of 6.6%. Durable goods orders beat market forecasts, although showed some signs of softening.


Week ahead

A heavy US economic calendar is scheduled this week, with Services PMI and Manufacturing PMI having the potential to affect up USD volatility before Friday's key U.S. jobs figures release.


Calendar

Tuesday 2:45pm | Chicago Purchasing Managers' Index (Aug),

Wednesday 1:15pm | ADP Employment Change (Aug), ISM Manufacturing PMI (Aug)

Thursday 1:30pm | Initial Jobless Claims (Aug 27)

Friday 1:30pm | Nonfarm Payrolls (Aug), ISM Services PMI (Aug)


Euro


The Euro was relatively quiet.


Movements

EURUSD began the week at 1.1712 and steadily edged higher, traded back above the 1.18 level for the first time in 4 weeks and closing at 1.1829 (+1%).


GBPEUR opened at 1.1646 and traded rangebound, fluctuating between 1.1640 and 1.17, to close slightly higher (+0.17%) at 1.1665.


Movement rationale

Whilst investors overall remained cautious during the last trading week of August (taking few positions) the Euro managed to rebound from the recent lows against the Dollar. The single currency was relatively passive to disappointing consumer sentiment figures in Germany, which dropped for the second month in a row on fears of potential new COVID related movement restrictions.


Week ahead

The Eurozone economic data calendar includes the following:


Calendar

Tuesday 10am | Consumer Price Index (Aug)

Wednesday 7am | Germany Retail Sales (Jul), Unemployment Rate (Jul)

Friday 10am | Retail Sales (Jul)


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