Pound takes a battering as Forex traders selling pounds buying euros following yesterdays Inflation report.
It is a quiet day in terms of US data with the initial jobless claims for the week ending 9/8 been of any interest. Markets are expecting a modest rise again could prove to be USD positive.
GBP
The Pound took what some might say an absolute pasting yesterday following the Bank of England’s Inflation report. Bank of England governor Mark Carney discussed the UK economy and interest rates. Sterling tumbled to a four month low against the US Dollar as Carney said rate increases would be ‘gradual and limited’ and tied to wage growth. The Pound has dropped to a 45 day low against the Euro and is now well under 1.25 having started yesterday above 1.26 market rate.
Markets were clearly disappointed by Mark Carneys comments and moving of the goalposts. Bank of England policy makers maintained their key interest rate at a record low 0.5 percent last week. Minutes of the August meeting which will show whether the decision was unanimous will be released on August 20th.
UK labour market figures yesterday showed the first drop in pay since 2009 and unemployment falling to 6.4 percent in the three months ended in June.
At 10am this morning we have the euro-zone inflation report. Markets are expecting this to be confirmed at 0.4 percent. Earlier this morning we had the GDP (Growth) data for France and Germany. Both missed analysts forecasts causing European stocks to drop and moving EURUSD down a notch.
Germanys economy contracted last quarter more than expected and France failed to grow, adding to pressure on the euro area as the Ukraine crisis and slowing inflation threaten to derail the regions recovery.