Sterling still remains vulnerable on No-Deal fears

Amid poor macroeconomic data on Friday, GBP/USD extends losses to 32-month lows.

Previous Day's Market Highlights

  • Sterling remains under intense pressure on the whole due to Brexit however, Friday morning added extra weight to this amid dismal growth & production figures.
  • Preliminary estimates of Q2 GDP came in at -0.2%, worse than the reading expected. Industrial Production fell in June by 0.1% (MoM) and by 0.6% (YoY), whilst Manufacturing Production decreased by 0.2% (MoM) and by 1.4% (YoY).
  • Speculation continues to mount eluding to a possible General Election which at present looks to be 1 day after the UK leaves the European Union on November 1st. MPs will have to move rapidly to attempt blocking this outcome when they return from recess in September.
  • EUR/USD gathered momentum into the London fix and rose to highs of 1.1218 earlier in the day Friday. This all but caps off the ripple effect of Dollar weakness from falls in the 10-year US treasury yield to below 1.60%, the lowest yield seen since October 2016 - setting dovish expectations of a rate cut as early as September. 
  • Farmers in the US insist Trump is ‘’ruining’’ their markets as US-China trade wars deepen. US farmers lost their 4th largest customer this week in rebuttal from the Chinese to the 10% Tariff pledged by Trump.
  • This comes in addition to Friday’s comments concerning the next round of face-to-face talks with China when he responded ‘’maybe’’ when posed with the option of the event being cancelled entirely.
  • Data from Canada showed employment declining by 24k in July vs an expected figure of 15k Due to a plunge in the private sector - This is the biggest job loss in 11 months.
Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.0795 1.1246 1.0736 4.53%
GBP/USD 1.2065 1.2578 1.2015 4.48%
EUR/USD 1.1174 1.1285 1.0736 1.91%
GBP/AUD 1.7799 1.8041 1.7560 2.67%
GBP/NZD 1.8673 1.8960 1.8278 3.60%
GBP/CAD 1.5953 1.6438 1.5872 3.44%

Today's Market Highlights

With no macroeconomic data from the UK and very limited across the majors, we have the following:

  • This evening we have the monthly budget statement for July out from the US at 19:00. A reading of $-112.5B is forecast.
  • The Food Price Index (MoM) for July is out tonight at 23:45. Forecasts are set for an increase to 0.4% from a previous of -0.7%.

Today's Economic Calendar

Time Currency Release Consensus Previous
4:30pm USD 3-Month Bill Auction 2.7%
4:30pm USD 6-Month Bill Auction 1.95%
7:00pm USD Monthly Budget Statement (Jul) $-112.5B $-8.0B
11:00pm AUD RBA's Kent speech
11:45pm NZD Food Price Index (MoM) (Jul) 0.4% -0.7%