This week has begun on a slightly quieter note- with the main event being Jackson Hole Thursday-Friday this week- Sterling exchange rates ended last week slightly lower across the board after a surge in the U.S Dollar and some poor UK Data- it was positive to see a green day for Sterling on Monday with GBPUSD back above 1.37 and GBPEUR just below 1.17.

Monday was Flash PMI Day with releases from Europe, the UK, and the U.S- showing slightly worse numbers than expected, which came as no surprise with delta variant fears and rising cases- but still encouraging growth overall after reopening. PMI Data is not one of the most important data pieces for me- and with Jackson Hole this week, I think all eyes are focused elsewhere right now.

However, leading up to Thursday we have a few releases which could be helpful next month- the first being GDP Growth for Germany on Tuesday- which so far is expected better, but to an extent should be ignored as a reopened economy would always look better than a closed one!

On Thursday we have the ECB monetary policy meeting accounts- no surprises expected from this, which will be closely followed by GDP Growth rate numbers for the U.S, which is expected to be more positive- this alongside jobs data will make for an interesting Thursday afternoon.

And of course, our main event- the Jackson Hole Symposium- the main talk is that the market has been expecting some form of QE announcement from Fed Chair Powell on Thursday- the U.S has reopened, jobs data is looking better, so it makes sense that less liquidity is needed for the market. However, as concerns have risen over the Delta variant and rate of vaccinations, it now seems that this meeting may not be as clear-cut as we once anticipated.

Jackson Hole has now changed to a virtual event (last minute) which backs up concerns over the Delta Variant, and Fed’s Kaplan stated that if the Delta variant is persistent or begins to affect demand, then they would have to adjust policy views accordingly- all of this says to me that we may get a “wait and see” approach this week (No different to every other Fed meeting this year).

Essentially, the expectations for this week are below;

  1. If the Fed announce that tapering Q.E is on the cards- this is good for the Dollar and price will continue to go in favour.
  2. If the Fed sticks to their stance and doesn’t mention Q.E yet- this would be perceived as weak for the Dollar and GBPUSD price could move back up.
  3. The unknown- unfortunately with speeches it entirely comes down to what is said on the day- and Black Swan events are common these days.

Unfortunately, we are at an “It could go up, it could go down” situation for this week- but with prices as they are currently, we don’t expect a rise to be extremely dramatic.