UK GDP, Fed in Focus

Sterling saw support yesterday morning as it continued to edge away from last week’s lows. Sterling-dollar rose towards 1.3080 but later pulled back towards 1.3025. Sterling-euro also picked up during the morning session, testing 1.1200 before later retracing lower. Euro-dollar rallied above 1.1700, just shy of August 2015’s 1.1715.

Previous Day's Market Highlights

Sterling saw support yesterday morning as it continued to edge away from last week’s lows. Sterling-dollar rose towards 1.3080 but later pulled back towards 1.3025. Sterling-euro also picked up during the morning session, testing 1.1200 before later retracing lower. Euro-dollar rallied above 1.1700, just shy of August 2015’s 1.1715.
 
US data were mixed as housing price indices fell short of expectation whilst Consumer Confidence unexpectedly jumped to 121.1 from 117.3, versus expectations of a decline.
 
Brent crude rose above $50 a barrel yesterday to settle at its highest levels since 1 June. Oil rallied after Monday’s OPEC meeting as Saudi Arabia pushed complying with output cuts and said it would further reduce its own exports. The Canadian dollar was little changed against the pound at the time but overall regained ground in the afternoon session.
 
The Aussie stumbled overnight as CPI data disappointed expectations, slowing to 0.2% QoQ and 1.9% YoY from 0.5% and 2.1%, respectively. RBA Governor Lowe indicated the central bank is not in any rush to hike rates. The kiwi benefited from above-forecast trade data. 

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1187 1.1438 1.1117 2.81%
GBP / USD 1.3018 1.3127 1.2794 2.54%
EUR / USD 1.1636 1.1713 1.1291 3.60%
GBP/AUD 1.6495 1.7107 1.6269 4.90%
GBP / NZD 1.7536 1.7994 1.7421 3.18%
GBP / CAD 1.6291 1.6978 1.6238 4.36%

Today's Market Highlights

The first estimate of Q2 economic growth in the UK will likely be a source of volatility for the pound this morning (09:30 BST). If growth slows or is little changed, the pound could come under pressure, while an above-forecast release could give it a boost. Traders will be looking for signs of the economy’s strength ahead of next week’s BoE meeting.
 
The Fed announces its latest interest rate decision this evening (19:00 BST) and is expected to keep interest rates on hold. Markets will be watching for any announcement of the date on which the Fed will begin reducing its balance sheet, as well as for any discussion of softer inflation’s implications for the path of interest rates.
 
EIA Crude Oil Inventories (15:30 BST) will be in focus this afternoon after Brent Crude broke back above $50 a barrel. A decline in inventories could support oil prices and the Canadian dollar. 

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Preliminary GDP QoQ (Q2) 0.3% 0.2%
09:30 GBP Preliminary GDP YoY (Q2) 1.7% 2.0%
15:00 USD New Home Sales MoM (Jun) 0.615M 0.610M
15:30 USD EIA Crude Oil Inventories (21 Jul) -2.980M -4.727M
16:30 EUR ECB's Lautenschlager Speaks
19:00 USD Fed Interest Rate Decision 1.25% 1.25%
19:00 USD Fed's Monetary Policy Statement