The pound lost 0.5% against the US dollar yesterday as a string of US data renewed the greenback’s strength. However, compared to this time last week, the pound is just under 1.0% higher. Sterling may feel pressure today as all eyes turn to US labour market reports, due this afternoon.
In the US, the index that measures core personal consumption expenditure prices, which exclude food and energy, increased 0.2% month-over-month in July. It maintained the same pace as the previous month and matched market expectations.
At the South African Reserve Bank’s Biennial Conference in Cape Town, Bank of England (BoE) chief economist Huw Pill said, “The key element is that we on the MPC (monetary policy committee) need to see the job through and ensure a lasting and sustainable return of inflation to the 2.0% target.”
Yesterday, minutes from the European Central Bank’s (ECB’s) most recent meeting revealed policymakers were considering the possibility of a September rate hike when they raised Bank Rate in July. However certain members suggested such a move might not be necessary once new projections are disclosed.
Comments from ECB policymaker, Isabel Schnabel, convinced economists that a September rate hike is less likely and as a result, sterling gained 0.35% against the euro but remains largely unchanged since this time last week.
British retailer, Wilko, confirmed yesterday that about a third of staff at its Nottinghamshire head office and warehouses are to be made redundant as the £90 million bid fell through. Discussions around a rival bid from HMV owner, Doug Putman, continue.
This morning, we heard that Chinese factory activity rose to 51.0 in August, representing the biggest expansion in activity since February and exceeding market estimates of 49.3.
Later today, US economists will receive the latest figures for non-farm payrolls, which are expected to come in below average at 180,000 jobs, and the US unemployment rate, which is forecast to remain unchanged at 3.5%.
S&P Global will also release its manufacturing purchasing manager’s index for the UK, US, EU, France, Germany and Italy, today.
The first week of September is set to be relatively quiet on the data front, however the week after brings key inflation and interest rates for the US and Euro Area.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your Personal Trader on 020 7898 0541 to get started.
