Home Daily Commentaries Dollar rallies after poor Chinese data

Dollar rallies after poor Chinese data

Daily Currency Update

GBP/USD has slipped back below 1.21 again as concerns over the UK economy continue to mount. Data released on Friday saw UK GDP for April-June contract by 0.1%. Although slightly better than expectations, the energy cost spending squeeze we are set to see over the winter, means that sterling's gains are likely to be limited as households are stretched financially to cover the skyrocketing costs of heating bills. This week's main event from the UK will be Wednesdays CPI print, which is expected to show inflation increase to 9.9% from 9.4%, its highest level in over 40 years. GBP/USD currently trades around 1.2090 with GBP/EUR just above 1.18.

Key Movers

It is a relatively quiet start to the week, with much of Europe enjoying an extended weekend due to Assumption Day bank holiday. Stock markets are trading lower on the back of some concerning data from China. Retail Sales and Industrial Production numbers for July both fell well short of expectations, which has led markets to seek the safety of the US dollar. China's zero COVID-19 policy is having a huge impact on the worlds second-largest economy as it continues to lockdown entire cities in an effort to stop the spread of coronavirus. Looking ahead to Thursday's US Retail Sales data, the minutes of the last Federal Open Market Committee will likely be the main focus for markets. EUR/USD trades around 1.0230.

Expected Ranges

  • GBP/USD: 1.2040 - 1.2200 ▼
  • GBP/EUR: 1.1770 - 1.1880 ▲
  • GBP/AUD: 1.7030 - 1.7200 ▲
  • EUR/USD: 1.0180 - 1.0320 ▼