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GDP drags the Pound lower

GBP - British Pound

Sterling woes continued on Friday following the latest release of GDP numbers pushing GBP/EUR to its lowest level since October 2009. The numbers released highlighted the UK economy shrank by 0.2% during the second quarter, the first negative GDP growth figure since the end of 2012. Cable also dropped to its lowest level of 3 years of 1.2025.

Brexit rhetoric was fairly muted over the weekend and its unlikely to sound any better over the coming weeks. One of the key meetings to watch for this month will be with PM Johnson meeting with Macron and Merkel in person at the G7 summit on 24-26 Aug.

For the week ahead we look towards the average earnings index tomorrow, CPI on Wednesday and retail sales on Wednesday.

Key Movers

For the single currency, Italian politics has resurfaced as a source of uncertainty as of late and is expected to weigh on the sentiment sooner rather than later. The Italian Deputy Prime Minister (PM) and far-right interior minister Matteo Salvini is calling for a snap election, an event that could weigh on the Euro but one that could face many stumbling blocks.

For the Greenback, Trumps twitter handle has been working on overdrive and renewed tension in the US-China trade wars have re-surfaced. The dollar was hampered by softer than anticipated inflation indicators, while President Trump confirmed the US would not enable business with Chinese Telecom company Huawei, nor was it ready to compromise on a trade deal. The comments fuelled concerns the trade tiff will continue through the foreseeable future further weighing on global growth. EUR/USD pushed higher touching 1.1308 last week, its highest level since early July.

Expected Ranges

GBP/EUR: 1.0730 - 1.0850 ▼

GBP/USD: 1.2010 - 1.2080 ▼

GBP/AUD: 1.7720 - 1.7880 ▼

GBP/NZD: 1.8580 - 1.8710 ▼