Good morning, please see today’s entry to our Daily FX Market Commentary.
While British exit from the European Union fears seem to have calmed down a little, and the USD has retreated against the 7 year lows that we saw two weeks ago, it is worth noting that there still can be a few more movements in the pipeline. Perhaps not in today or tomorrow (or yesterday, which was very mild in terms of movements). But certainly there are many who have not decided how to hedge or protect themselves for referendum outcomes and so further movement from this issue is, to my mind, likely.
Yesterday didn’t show a lot of movement at all, there seems to have been no real advance on the major underlying issues. With no economic data to produce of any particular note, it made for a quiet day for movement.
Today, we have some jobs data but I suspect that if the European Central Bank announcements show some need for further financial support the US might pick up a bit of strength on risk worries.
Yesterday, despite some ups and downs in the middle of the day, the GBPEUR didn’t change an awful lot. There wasn’t a great deal of information yesterday but today is shaping up to be markedly different.
During the week we saw that the EUR didn’t pick up a lot of ground on the GDP news, in part because the market is still expecting further supportive action from the European Central Bank – a clear indicator that the economy is still struggling across the nations in the single currency.
Today that will be a critical discussion point as we receive the Eurozone interest rate decision, the overnight deposit rate and a commentary from the ECB. If I were a betting man, I’d be thinking USD up little, EUR down a bit more (vs the GBP).
The result of yesterday’s production and industrial situation in the UK was, in brief, industrial = same as last year but slowing down. Manufacturing = going great guns and improving both recently and year on year.
The think tank NIESR (influential) produced a slightly shrinking picture of their forecast for the UK’s economy, so that will weigh on the GBP slightly.
All eyes today will be on the Euro announcements which is likely produce the principal exchange rate guidance.