26th July 2017 Market Update
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?? GBP – Economic data releases to move the pound were thin on the ground on Tuesday and as a result, Sterling traded within very tight ranges against its major pairs in the morning. However, Trump’s Twitter ramblings around midday provided a surprising boost of nearly 0.5% against the US dollar and euro as he confirmed a trade deal between the US and UK is being worked on whilst also criticising the euro, all in 140 characters.
The market reversed to previous levels by the end of the afternoon ahead of MPC member Haldane’s speech at 18:00 which had no effect.
Today sees the UK’s preliminary GDP figures released at 09:30 which is expected to improve month-on-month but fall year-on-year. Market movements will be dictated by whichever figure appears to carry most weight.
?? EUR – German data dominated the Eurozone releases yesterday with only the IFO Business Climate readings being released. These came out higher than expected in the early hours of trading but did not overly affect the market. The euro strengthened throughout the afternoon, breaking new barriers against the US dollar despite warnings from the IMF not to taper their QE programme prematurely.
The common currency has another day in the shadows for economic data with only a speech from the ECB’s Lautenschläger having any potential for creating market movement at 16:30.
?? USD – The Redbook index was released just before 2pm yesterday and showed that retail sales remain in line with the previous month but this failed to inspire any volatility.
Today’s focus will be on the Fed’s Interest Rate decision and Monetary Policy Statement at 19:00. No changes are expected in the interest rate but the market will watch for any forward guidance on upcoming decisions. Any suggestion of a hike could help the US dollar make gains following analysts commenting in recent days that the greenback appears to be oversold.
09:30 – UK Gross Domestic Product (Q2)
16:30 – ECB’s Lautenschläger speech
19:00 – Federal Reserve Interest Rate Decision and Monetary Policy Statement
Our View: Sterling seems to be taking a breather at the current levels with very little movement seen in the early part of this week. It is possible that the pound will remain range-bound until next Thursday when the Bank of England will make its latest interest rate decision. The euro seems to be dominant at present but the US dollar could ease away from its recent lows in the weeks to come.
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