Sterling ends on a low note

Friday ended the same way it opened, with Sterling once again being sold and weakening against its peers. This was due to the UK Foreign Minister, Boris Johnson speaking to the BBC. When speaking to the BBC, Boris Johnson stated that ‘the government is working towards an Article 50 letter which as you know will be produced, probably, in the early part of next year’. As a result, confidence in the Pound dropped and saw it fall across the board, throughout trading hours on Friday. Also on Friday, the Eurozone posted mixed PMI results as Manufacturing registered a better than expected figure of 52.6, whereas the Services sector fell to a 52.1 reading.

Monday 

Today, the focus will be on the single currency zone with the release of the German Ifo Business Climate this morning. Business Confidence for the powerhouse of the Euro zone is due to remain at the previous 106.2 figure, and will continue to show that confidence is still buoyant, despite the concerns still remaining around Brexit. This afternoon ECB president Mario Draghi, is set to testify before the committee on monetary and economic affairs in Brussels. The markets will look for any additional clues as to what further actions could be seen by the ECB if growth and inflation continue to drag below their expectations. As a result, we could see some swings for the Euro this afternoon.

Tuesday 

There will be no high tier data releases but the main reading will come from the US in the form of the first reading of their Services PMI, which is due to register at 51.1, in line with the last figure. Consumer Confidence will be watched by markets as this accounts for the majority of the US economic activity, and a fall below the forecasted 98.6 reading could see the Greenback weaken. 

  • US Flash Services PMI
  • US Consumer Confidence

Wednesday 

Fed Chair Janet Yellen will be in the spotlight as she testifies in Washington before the committee on financial services. All will look for any clues in her rhetoric as to when rates may be hiked again and the timing of the next increase. Monthly Durable Goods Orders from the US are set to hit the wires also, with orders anticipated to slow by -1%.  Mario Draghi, the head of the ECB is also set to speak in Berlin about the developments of the Euro area later in the afternoon. 

  • US Durable Goods m/m
  • US FED Chair Janet Yellen Testifies
  • Euro ECB President Mario Draghi Speech
  • US Crude Oil Inventories

Thursday 

The final reading of Q2 GDP from the US will be in the limelight as this will no doubt give a good indication of whether the Fed will indeed raise rates this year. Also if it posts better than 1.3%, it could possibly give the Dollar a boost as many will expect rates to be increased sooner rather than later. Apart from this high tier data release, there will be comments from a few central bank speakers in the afternoon. 

  • US Final GDP Q2
  • US Unemployment Claims
  • MPC member Forbes Speech
  • US Fed Chair Janet Yellen Speech

Friday

This week ends with several high tier data releases throughout the day. Firstly, the UK will post the final Q2 GDP figure which is set to remain at 0.6%. If results are different, there could be more volatility for the Pound. At the same time, the UK current account, which shows the difference between what is imported against what is exported, is due to hit the wires. It is expected to slightly improve to -30.5b and show further positive signs despite the Brexit vote. The Eurozone are set to see their yearly inflation figure increase to a slightly healthier 0.4%, an increase from the current 0.2%. Across the pond, the US will post their Chicago PMI figure in the afternoon that is anticipated to show an increase to 52.1.

  • UK Current Account
  • UK Final Q2 GDP
  • Euro CPI Flash Estimate y/y
  • US Chicago PMI