The Greenback continued to make small gains in the FX market yesterday, as investors remained risk averse. GBP/USD slowly edged one per cent lower throughout the European session, whilst EUR/USD fell 0.5 per cent. Sterling is reversing, which supports the view that it’s recent recovery will be short lived, as we approach next month’s probable rate cut from the Bank of England. The slight Greenback strength is result of safe haven flows rather than investor’s being bullish about the Dollar.
The UK released a raft of high tier data yesterday, unfortunately the figures do not reflect the post-Brexit price environment. Markets are eager to watch these figures to gain an insight into the BoE’s thought process for the upcoming August meeting. UK Consumer Price Index (CPI) rose by 0.5% this year til June 2016, slightly higher than the rate seen for the most part of 2016. However, this is still historically very low, rises in air fares, recreational and cultural goods and services were the main contributors to the slight uptick.
Today there are two key data releases. Firstly, the Producer Price Index from Germany which is forecast at -2.7% and the UK claimant count change, which measures the change in the number of unemployed people in the UK during the reported period. This figure is not an unemployment indicator it simply measures the number of people claiming benefits.