No negative surprises with the UK jobs release earlier today, but will UK inflation follow suit tomorrow morning?
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| GBP v EUR has barely moved for over a week now as traders prepare for what the next few days may bring.
One test has been and gone with the UK's jobs market meeting expectations across the board for July. Jobs being lost were at their softest for 6-months and average earnings slowly continue to fall (all positive news for £).
The next test and main one for the week comes tomorrow with the UK inflation numbers.
UK inflation hit its highest level since January 2021 last month (July's reading) with the BoE predicting a peak of 4% would be seen in September. The consensus is for 3.8% to be repeated this time round, but any deviation from this will move the Pound.
Next up is the Bank of England interest rate decision due midday Thursday. A historic second round of voting pushed through a 25bp rate cut last time, but almost all 9 MPC members are expected to hold interest rates this time.
Again, any surprising votes or interesting comments by Governor Bailey at the meeting afterwards will create GBP volatility. But we are expecting this one to be a non-event ourselves.
Finally Friday's retail sales number maybe be the least important for the week, but it has however been a good indicator of economic health in the UK of late, so I wouldn't be surprise to see this release move Sterling in some way.
GBP v USD has gained 0.5% in the last week and looks to have strong momentum for further improvements in both the short and longer term.
Whilst the market has fully priced in a 25bp cut from the Fed on Thursday, more gains could be made on release and on what Fed Chair Powell says on forward guidance for interest rates.
Remember, what the Fed does will usually be replicated in some way and at some point by the BoE, so what is said and done Thursday evening is very important to the future performance of the Pound.
£-$ is currently just 1% away from the highest point seen since October 2021. |
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