Pound finds support ahead of BoE rate decision

31st July 2018 Market Update

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?? GBP - The pound found some support yesterday, after the reading for net lending to individuals showed an improvement along with better consumer credit and mortgage approval figures in the morning.

Today, there is no data due from the UK, markets will look forward to the Bank of England rate decision on Thursday and any Brexit developments.

?? EUR - The euro remained steady yesterday as the final reading of consumer confidence remained unchanged in July at -0.6 as expected, however the business climate reading missed expectations and the economic sentiment indicator hit the lowest level in a year. German inflation just missed expectations but remains healthy at 2%.

Today, we have already seen German retail sales print a healthy reading, though focus will be on the Eurozone GDP, unemployment rate and inflation readings all due at 10am, with an improvement in unemployment and slight drop in growth expected.

?? USD - With little in the way of data releases yesterday, the market looked forward to the PCE inflation figures due this afternoon which is expected to remain at the target 2%. This comes in ahead of the Fed interest rate decision on Wednesday, though the Fed is widely expected to keep the rate on hold until the September meeting.


Key Announcements

?? EUR
10:00am: GDP YOY Q2 expected at 2.2% from previous 2.5%
10:00am: Unemployment rate expected at 8.3% from previous 8.4%
10:00am: CPI expected to remain at 2%

?? USD
13:30pm: Core Personal Consumption Expenditure – Price index YoY June expected to remain at 2%


Summary: A very quiet day on the data front yesterday, though positive readings in credit, lending and mortgage approvals in the UK helped prop up the pound. Markets are looking forward to the Bank of England rate decision on Thursday when a hike in the interest rate is expected, and the Fed meeting on Wednesday which could provide further forward guidance.


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