Sterling weakened against the euro and US dollar yesterday, following mixed economic reports from the UK and the eurozone. That has been exacerbated this morning, with bad news in the form of falling Gross Domestic Product (GDP) knocking another third of a percent or so off GBP/EUR, to hit its lowest for a month and GBP/USD to its lowest since mid-June.
The headline yesterday was unemployment and earnings data, which showed a loosening labour market, with the jobless rate rising to 4.3% in July, from 4.2% the previous month, but in line with expectations. What surprised the markets, however, was the earnings data that showed a large boost in salaries with bonuses, with an important knock-on effect for pensions (see below).
However, it was followed not long afterwards by the ZEW Economic Sentiment Index which was markedly downbeat for the eurozone, slipping to -8.9 from -5.5 last month, but a little improved for Germany, again against predictions.
This morning we have heard GDP for the UK, which showed that the British economy shrank by 0.5% in July, hit by strikes and bad weather.
In business news, the EU has forced Apple to use the USB-C cable for its new iPhone 15, rather than its proprietary lightening cable, in an effort to cut tech waste. The new iPhone and Apple Watch models will have a host of eco-improvements and some will be carbon neutral, said Apple CEO Tim Smith.
For the rest of the week, exchange rates will continue to be dominated by high-level economic data releases and central bank actions, with US inflation today and the European Central Bank’s interest rate decision tomorrow.
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.
