Sterling avoids further falls

2nd August 2019 Market Update

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🇬🇧 GBP –  Sterling was resilient yesterday with rates staying flat in reaction to what could have been a difficult day. Manufacturing sector PMI results matched with the previous reading but beat expectations which acted as damage limitation and left markets unmoved. Later in the day, Sterling fell against the US Dollar to a fresh low ahead of the Bank of England unanimously voting to hold interest rates at 0.75%. Carney did not provide any comment on following the Fed in cutting rates but did lower growth expectations for this year and next. The Pound found some support towards the end of trading hours to finish the day level.

Today only features Construction sector PMI results in the economic calendar. Expectations are for the reading to remain in contractionary territory but to improve on the previous result. Analysts may overlook the result if this transpires.

🇪🇺 EUR – Eurozone Manufacturing sector PMI results also marginally beat expectations yesterday, but the market did not react. This contributed to the single currency remaining in very tight ranges for much of the day against the Pound and US Dollar.

Retail Sales and Producer Price Index data will be released at 10am this morning and will set the tone for the Euro with a lack of data later in the day. They are due to publish at the same level as last month and as a result, it is likely that today will be another quiet day for movement.

🇺🇸 USD –  The US Dollar index backed away from the highs seen following the interest rate cut on Wednesday evening during trading hours yesterday. The Greenback remains very strong however, and this was supported by manufacturing sector PMI results edging higher into expansionary territory in the early afternoon.

Analysts will end their week with the focus turned to Average Hourly Earnings and Non-Farm Payrolls in the US. The latter is expected to be lower than the previous reading which could hurt the US Dollar.

 

Summary:

GBP: Sterling finds support to end the month
EUR: Euro suffering from poor data
USD: Markets react favourably to “mid-cycle adjustment” to interest rates


 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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