Sterling exchange rates have improved significantly since the market dropped off following the Bank of Japan rate hike, GBPEUR has now climbed back to the 1.18 level, and GBPUSD has now reached 1.32, the latter is mostly owed to a weakening Dollar Index and more risk on environment, followed by Jerome Powell’s speech which confirmed a rate hike in September – which has created an environment for a stronger GBPUSD and EURUSD.
As far as this week is concerned, there isn’t loads of data, but we do have some important releases which will contribute to volatility this week- the two main days of releases are Thursday and Friday- on Thursday we have EU consumer confidence which is expected lower than previous, economic sentiment is expected higher- so all in all I am expecting the Euro to stay pretty stable on this release. Later on Thursday we have US GDP data where we are expecting a rise to 2.8%, which is great news for the U.S company, this will be released alongside initial jobless claims which are expected higher than last month and continuing jobless claims which is also expected higher- not good news for the U.S Dollar.
On Friday we have German unemployment data which is expected to remain stable at 6%, this will be followed by flash EU Core inflation which is expected to drop again to 2.8%, this will help the case for another rate cut in September- this data may weaken the Euro slightly however it is still on the upward trend against the Dollar. Later in the afternoon we have US Core PCE index where the expectation is that it will rise to 2.7%, rising prices may filter into the CPI data in September, however this will not affect rate cuts as Fed Chair Powell has already stated that they are no longer watching inflation.
Overall it is a quiet week but could have a volatile end- if you would like any particular analysis please don’t hesitate to contact me.