This morning, fresh Office for National Statistics data revealed that the British economy stagnated for the second consecutive month in July, missing market forecasts of 0.2% growth. These figures will come as a blow to chancellor Rachel Reeves who has put economic expansion at the heart of the Labour party’s agenda.
Last night, US presidential candidates Kamala Harris and Donald Trump took to the stage at Philadelphia’s National Constitution Centre for the high-stakes debate. Democratic candidate Harris was clearly well prepared, as she grilled the former Republican president on a number of topics including abortion rights, immigration, the 2020 election, the Ukraine war and her ethnicity, which Trump formerly made comments about.
The dollar index slipped following the debate as investors reacted to the first and only debate between the US presidential hopefuls.
The pound remained on the back foot yesterday, marking marginal losses against the US dollar following a short-lived recovery attempt on UK unemployment data. However, following last night’s debate, sterling has started to climb, albeit marginally.
Manufacturing, industrial and construction output in the UK all fell more than expected month-over-month in July, falling by 1%, 0.8% and 1.6% respectively.
Small business optimism in the US plummeted in August to 91.2, the lowest rate in three months, compared to 93.7 in July and forecasts of 93.6. Almost one-quarter of small business owners reported inflation was their single biggest problem.
This afternoon, the spotlight is on the US inflation rate which is forecasted to slow for a fifth consecutive month to 2.7% in August, from 2.9% a month earlier. The core rate, which excludes food and fuel costs, is also anticipated to remain unchanged at 3.2%.
Tomorrow is a big day for euro investors as the policymakers of the European Central Bank come together to decide whether to lower exchange rates even further. Markets expect the rate to fall by 25 basis points, from 4.25% to 4%, which would be a small step towards the bank’s target of 2.0% which was last seen in late 2022.
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