10th August 2018 Market Update
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?? GBP – The Pound steadied yesterday and managed to claw a little back versus the Euro overnight. However, the currency remains at 11-month lows amid investor fears that Britain will leave the EU without a deal in place. Many analysts believe that a deal will be reached, but doubts are increasing. The coming months of negotiations are crucial to the value of Sterling. Some commentators are predicting a further 10 percent drop in Sterling value, should the UK leave without a deal. However, economists are giving only a 25% chance of this happening.
After a week with no data output, this morning sees the release of monthly GDP, Manufacturing Production and, most importantly, Preliminary GDP for the quarter. There will have to be some adverse results for these to have an impact.
?? EUR – The single currency remains buoyant and there is little to report. There have been no announcements this week and a lack of data, though the currency has lost significant ground to a rampant US Dollar.
?? USD – The Dollar rose to 13-month highs against a basket of currencies overnight, with appetite for risk falling away amid escalating global trade tensions and diplomatic wrangling with sanctions. After a week of gains, the Dollar index is sitting at its highest level since July 2017, with the greenback benefitting from being the world’s safe-haven currency and absorbing flow from market makers averse to riskier investment in the current climate.
This afternoon sees the release of CPI Inflation data and a strong reading here could further bolster the Dollar.
09:30am: GDP/Prelim GDP
09:30am: Manufacturing Production
13:30pm: CPI Inflation
Summary: Sterling steadies at 11-month lows, as the US Dollar reached 13-month highs on declining risk appetite.
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