10th September 2019 Market Update
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🇬🇧 GBP – Sterling had another volatile day yesterday but for once, it was economic data that created the movement. The Pound had lost ground through the early hours, but surprisingly strong growth figures provided a boost. The GDP figure for July rose to 0.3%, up from a previous of 0.0% and is the best figure for 6 months. This will help to allay fears that the UK will enter a recession caused by Brexit uncertainty in the short term. Sterling reached 6 week highs against the US Dollar before conceding some of the gains in the afternoon. Johnson met the Irish Taoiseach, Leo Varadkar, for Brexit talks but the event passed without a breakthrough and had no effect on the Pound.
Today is the first day of the controversial suspended Parliament and it will remain to be seen how much this contributes to a less volatile Pound with fewer political headlines. In the economic calendar is Average Earnings which is expected to fall slightly which suggests the gains over the last few years may have now peaked. The Unemployment rate is due to remain at 3.9% which may help the Pound to hold the current levels.
🇪🇺 EUR – The Euro fared well yesterday against its major pairs following reports that Germany may increase fiscal stimulus to help boost their economy. This will no doubt benefit the entire region, but the gains were tempered by the expectations that the ECB will introduce a new round of monetary stimulus this week which markets expect to be ineffective in resolving Europe’s issues. Draghi’s tenure ends in October which may be a consideration in their action.
The Eurozone has a lack of data being published today which will mean that investors will remain cautious ahead of the ECB interest rate decision on Thursday.
🇺🇸 USD – The US didn’t have any data published yesterday which contributed to the Dollar falling off further after a tough end to the week last week. The US Dollar joined the Japanese Yen and Swiss Franc in falling against major pairs as markets look for riskier currencies in light of the likelihood of a no deal Brexit diminishing, a US/China trade deal back on the cards and German fiscal action helping to ease global concerns.
Today sees the JOLTS Job Openings survey published which helps to provide the background to the labour market in the UK but is unlikely to create a huge amount of movement. As a result, the Greenback could be susceptible to further drops.
GBP: Positive GDP figures boost Pound
EUR: Attention focused on ECB meeting
USD: Vulnerable to a sell off
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