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Market Update

• Posted by currencies in Bank of England, Currency, Dollar, Economy, EUR, Fed, GBP, Inflation, Rate Cuts, Rate Hikes, Sterling, UK, Uncategorised
• August 10, 2023
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The US Dollar has edged lower this morning ahead of what is a key inflation release for The US. With headline CPI forecast to pick up slightly in July to 3.3%, while the core rate which excludes volatile food and energy prices is forecast to climb 4.8% on a year-on-year basis.

The next scheduled meeting for The Federal Reserve is in September and a lower than expected inflation figure could further cement expectations that The Central Bank will agree to end it’s interest rate hiking cycle. We finish today with the last of The US-Focused data in the form of Continuing Jobless Claims and Initial Jobless Claims. The forecasted figures suggest a slight increase in both figures, further highlighting the struggles within the labour market for The US currently. A continued theme from last week’s underwhelming Non-Farm release.

We end the week tomorrow with UK GDP figures for June, and the second quarter with potential for GBP to recover recent losses if the release is positive. With The Bank of England mentioning they will be very much data-led in terms of the next rate meeting, any signs of unexpected strength or weakness in the economy’s growth could influence pricing expectations for future hikes. Although expectations suggest that second quarter GDP will have been unchanged compared on the first quarter, there is hope of a slight uplift of 0.2% year-on-year. The ending of the Premier League season at the end of May is anticipated to have weighed down on GDP slightly so it’ll be key to see the exact figures released as well as the impact on the rates.