US Inflation surprises
Daily Currency Update
Early Friday morning saw the release of UK GDP and growth figures. The UK economy showed 0.2% growth quarter-on-quarter and 0.5% month-on-month, both announcements coming in better than the predicted 0.0% and 0.2% respectively. The resilience of the UK economy means that a recession, currently, isn’t expected. GBP/USD broke back above 1.2700 on the news and briefly pushed above 1.2730 around midday. GBP/EUR also pushed higher, both on the latest data from the UK and an ECB bulletin citing heavy uncertainty. GBP/EUR has seen continual gains since Friday morning which sees the currency pair just above 1.1600 at the time of writing.A big data week for the Pound sees claimant count change on Tuesday, CPI year-on-year Wednesday, and retail sales on Friday, among other local releases. This will likely add to GBP volatility this week where the range under 1.2800 for GBP/USD may be broken and new highs might be tested for GBP/EUR.
Key Movers
The US dollar was under pressure last week after the latest CPI release for July came in below expectations at 3.2% year-on-year against the expected 3.3%. Core inflation year-on-year fell from 4.8% to 4.7%. However, the softer inflation data was met by higher-than-expected PPI figures on Friday. The month-on-month figures rose 0.1% which has complicated the FED outlook for a cooldown with the data showing an uneven path for inflation. GBP/USD which had jumped above 1.2730 after UK GDP figures, dropped to an overnight low of 1.2665. EUR/USD which had been making a play for 1.1000 early on Friday, but now sits closer to 1.0900, touching 1.0930 at the lows.Data is thin on the ground today, but we anticipate retail sales and manufacturing data from the US tomorrow. It will be the FOMC meeting minutes from the US on Wednesday that will likely hold the headlines for USD movement this week.
Expected Ranges
- GBP/USD: 1.2650 - 1.2760 ▲
- GBP/EUR: 1.1560 - 1.1640 ▲
- GBP/AUD: 1.9440 - 1.9620 ▲
- EUR/USD: 1.0910 - 1.0990 ▼