The first of a string of potentially influential data releases for the value of sterling has started negatively this morning with flatlining Gross Domestic Product (GDP) in July. Zero economic growth in the month pushed quarterly growth down to 0.2% after some positive news in May and June.
This week so far the Antipodean dollars and Norwegian krone have been on the ascendancy, while the US dollar has weakened. That drop was only marginal against the euro and pound. Indeed the past month has seen little movement overall between GBP, EUR and USD.
But will that last the current interest rate cycle? Yesterday’s US inflation reading was slightly elevated at 2.9%, but “core inflation” that strips out more volatile food and fuel rates held steady at 3.1%. The USA looks set for an interest rate cut next week, though whether it will be a quarter or half percentage point remains to be seen.
No such luck appears likely for UK mortgage-holders and businesses, when the Bank of England (BoE) makes its own interest rate decision a day later, on Thursday.
Ahead of that we have readings for unemployment and earnings on Tuesday and inflation on Wednesday. Neither result looks likely to knock the BoE’s Monetary Policy Committee off its cautious course, but it could all pile pressure on a besieged-looking government, reeling from high-level sackings and resignations.
Still, at least the government has a state visit from President Trump to look forward to. The Stars and Stripes are out on the Mall, and the good news for the anti-Trump demonstrations planned for London is that the week-long Tube strike will be over by then.
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