Dollar Gains, Lira Falls Further

The dollar has gained, pushing GBP/USD lower as the Turkish lira continues to weaken. UK GDP and US CPI are in focus today.

Previous Day's Market Highlights

The dollar strengthened overnight as the Turkish lira tumbled to a new record low on concerns about its financial system. The pound was trading above 7.70 against the lira at one point Friday morning. The euro fell on concerns about European banks’ exposure to the situation in Turkey. As a result, euro-dollar fell below 1.15 early Friday morning to hit its lowest levels in over a year—since July 2017. The dollar strength saw sterling-dollar headed lower as well, breaking below 1.28 to a new low since August 2017.
 
The pound remained subdued Thursday amidst concerns of a no-deal Brexit but managed to regain 1.11 against the euro and briefly eye 1.29 against the dollar before greenback strength resumed.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1153 1.1342 1.1073 2.37%
GBP/USD 1.2792 1.3293 1.2792 3.77%
EUR/USD 1.1469 1.1750 1.1432 2.71%
GBP/AUD 1.7478 1.7849 1.7284 3.17%
GBP/NZD 1.9394 1.9580 1.9077 2.57%
GBP/CAD 1.6732 1.7469 1.6741 4.17%

Today's Market Highlights

It’s a busier day for the pound as a raft of releases come into focus this morning (09:30 BST). A pick-up in Q2 economic growth could provide the pound with some at least temporary support, although a surprise to the upside would be needed for any notable gains and a sub-forecast release could instead increase sterling weakness. Overall, any potential gains may be capped if other releases disappoint, and the pound is likely to remain relatively subdued for the time being given ongoing Brexit uncertainties and dollar strength.
 
In the afternoon, US CPI data are in focus (13:30). A pickup in the headline reading is forecast with core inflation projected to stay on hold at 2.3%, but the overall impact may be relatively limited if the figures are little changed. Markets will continue to keep a close eye on the latest geopolitical and trade headlines.

Today's Economic Calendar

Time Currency Release Consensus Previous
9:30am GBP GDP MoM (Jun) 0.2% 0.3%
9:30am GBP GDP QoQ (Q2) 0.4% 0.2%
9:30am GBP GDP YoY (Q2) 1.3% 1.2%
9:30am GBP Manufacturing Production MoM (Jun) 0.3% 0.4%
9:30am GBP Manufacturing Production YoY (Jun) 1.0% 1.1%
9:30am GBP Industrial Production MoM (Jun) 0.4% -0.4%
9:30am GBP Industrial Production YoY (Jun) 0.7% 0.8%
9:30am GBP Total Business Investment YoY (Q2) 1.6% 2.0%
9:30am GBP Total Trade Balance (Jun) £-2.50B £-2.79B
9:30am GBP Goods Trade Balance (Jun) £-3.600B £-3.491B
1:30pm USD CPI YoY (Jul) 3.0% 2.9%
1:30pm USD Core CPI YoY (Jul) 2.3% 2.3%
1:30pm CAD Unemployment Rate (Jul) 5.9% 6.0%
1:30pm CAD Net Change in Employment (Jul) 17.0K 31.8K

Caxton