Daily Currency Update

Sterling rebounded from 11-month lows to gain over half a percent versus the euro on Wednesday on speculation the European Central Bank might not tolerate a strengthening single currency for too long.

Focus remains on euro area inflation in August. Yesterday’s German and Spanish figures were both higher than expected but the upside surprise was driven mainly by energy price inflation and the higher inflation should not alter the ECB’s current view on its monetary policy strategy.

Euro area and German unemployment rate figures are also due for release today. Both figures have declined over the past years and the German unemployment rate is very low in a historical perspective. This has been one factor supporting consumer sentiment, which is at the highest level in more than 15 years. The ongoing strong economic situation in Germany bodes well for Angela Merkel in the upcoming election.

US inflation figures will attract attention in the afternoon with the release of the PCE figure. The decline in PCE core inflation in the first half of this year has sparked some concern about lack of inflation pressure within the Fed.

Nevertheless, the Fed has said quantitative tightening will begin ‘relatively soon’ and we expect it to be announced in September.

The U.S. dollar continued its recovery from a 2.5-year low on Tuesday, supported by U.S. economic data which surpassed economists’ expectations.

With a GDP growth at 3% the U.S. economy grew at its fastest pace in more than two years, while ADP employment data showed private-sector payrolls up by 237 thousand compared to the expectations of only 185 thousand.

Leave a Reply

Your email address will not be published. Required fields are marked *

What's Going On?

Currencies 4 You Ltd is a company registered in England and Wales (registered no. 06866898). Registered office: Regus House Victory Way Admirals Park, Crossway, Dartford, Kent, DA2 6QD. Currencies 4 You Ltd Payment and Foreign Currency Exchange Services are provided by Currency Cloud Limited, Equals Connect Limited and Ebury Partners UK Limited. Currency Cloud Limited. Registered in England No. 06323311. Registered Office: Stewardship Building 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money. FCA registration number: 900199. Payment Services are provided by Equals Connect Limited, registered in England and Wales (registered no. 07131446). Registered Office: Vintners’ Place, 68 Upper Thames St, London, EC4V 3BJ. Equals Connect Limited are authorised by the Financial Conduct Authority to provide payment services (FRN: 671508). Currencies 4 You Ltd is partnered with Ebury Partners UK Limited as its Programme Mananger. Ebury Partners UK Limited are authorised and regulated by the Financial Conduct Authority as an Electronic Money Institution. (Reference Number 900797). Ebury Partners UK Ltd is registered with the information commissioners office with registration number: ZA345828. | Terms and Conditions | Privacy Statement | Careers