Towards the end of last week, we saw GBP claw back losses against the U.S Dollar following underwhelming employment figures on Friday. The NFP report came in at 235k which was a huge miss with expectations at 750k jobs created. This data release confirmed that recovery has slowed in the U.S, most probably due to the Delta Variant spreading- and has backed up the Fed’s notion of not tapering QE just yet. The consensus for this is potentially an announcement in November and for tapering to begin in December- and then of course the next main objective is hiking interest rates- but it seems the Fed are in no rush to do so and markets are currently pricing end of 2022 currently.
Looking at this week, it is Labor Day on Monday so not much movement is expected across most traditional markets- we may see some on FX during the European session. On Tuesday the RBA has their interest rate decision- with no change expected for now, especially with current restrictions- however, it will be interesting to see where GBPAUD lands on Tuesday morning after the decision. We also have BoC interest rate decision on Wednesday, again with no change expected- with the Fed holding back, it may be that other Central Banks are following suit.
The week gets more interesting on Thursday with the ECB’s interest rate decision- though no change is expected, with Europe’s economy on the rise, it will be interesting to see their stance on the economy and where they see things going- we could see some movement on GBPEUR and EURUSD during this speech.
Lastly, on Friday we have a few UK data releases- Trade Balance, Industrial Production, and Manufacturing Production- all for July- these releases may come in slightly weaker for July- but shouldn’t take much effect on the market as expectations have become better during August.