31th July 2019 Market Update
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🇬🇧 GBP – Little to no movement throughout the course of European trading hours yesterday with most of the damage done to the pound in the early hours of the morning.
Sterling remains near multi year lows as fears of an early general election being called as Boris Johnson and his cabinet continue to push the rhetoric that a no-deal Brexit remains a real prospect.
The only notable data is the latest report by Nationwide on house prices in July but as we have seen future rate moves are likely to be dictated by politics.
As mentioned yesterday, clients selling foreign currency to buy pounds will be enjoying the cheapest rates to buy pounds for a few years now. Please call your dealer to discuss hedging strategies on any future requirements you may have.
🇪🇺 EUR – European business confidence fell near to a six-year low in July to -0.12. This was the first negative since October 2013 and adds to the woes of the European economy following the recent slowdown in Germany’s economy.
Focus today will fall on growth estimates for the second quarter of 2019 expected to lag marginally by 1%. Inflation data is also due forecasted to drop to 1.1% and the unemployment rate is forecasted to remain at 7.5%. The data will be closely looked at markets to see when and what the ECB will start easing monetary policy.
German inflation figures are due out forecasted to drop to 1.5% in July from 1.6% in June.
🇺🇸 USD – Dollar gains were halted yesterday after consumer spending inflation came in lower than expected at 1.6%.
Donald Trump had another outburst at China yesterday suggesting his patience is wearing thin with China.
Focus in the afternoon will come in the form of the latest ADP job print, with an expected 150,000 jobs to have been added in July. Then in the evening, the spotlight will fall on the Fed, where they are widely expected to cut interest rates from 2.5% to 2.25%. However, of more importance could be the accompanying rate statement by Jerome Powell as markets will look for indications on the path of future rate cuts. The dollar index remains at its strongest levels since the end of May.
GBP: Sterling still trades at multi year lows
EUR: Business confidence at lowest for 6 years
USD: Fed Expected to cut interest rates to 2.25%
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