Markets were thinking long-term yesterday with regards to the pound, due to a lack of available data. The government had set out more of its negotiating aims, but these appeared not to soothe the unease gripping the pound.
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Daily Market Analysis August 24th 2017 |
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Focus on Brexit pushes pound lower Markets were thinking long-term yesterday with regards to the pound, due to a lack of available data. The government had set out more of its negotiating aims, but these appeared not to soothe the unease gripping the pound. The pound is largely bouncing back from yesterday’s weakness. After hitting a fresh eight-year low against the euro, GBP/EUR has rebounded 0.1% to €1.0846, although GBP/USD remains stuck just below opening levels at US$1.2798. GBP/AUD is at 0.4% to AU$1.6244, while GBP/NZD has also risen by similar amount to hit NZ$1.7775. GBP/CAD is stuck opening levels at CA$1.6055. Today sees the release of the all-important second estimate for UK GDP during the April-June period. Read on to find out why markets are fearing a downwards revision… |
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Today's Rate The rates above are using the British pound (GBP) as the base rate. All rates are for indication purposes only. Prices can vary dramatically based on amount and delivery date. |
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| "The government had set out more of its negotiating aims, but these appeared not to soothe the unease gripping the pound." Transfer 24/7 with our currencies direct app |
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What’s been happening? The UK data calendar was empty yesterday, leaving markets to ponder the long-term outlook for the UK economy. A survey released on Tuesday by the Recruitment and Employment Confederation (REC) revealed that the number of business owners believing the economy is set to worsen has risen to outnumber those who believe it will improve. The market had a mixed reaction to the latest UK government positioning paper ahead of Brexit. Analysts were interested to see the UK government appeared to be leaving the door open for the European Court of Justice (ECJ) to have some influence over UK matters following the divorce. Suggestions that the EU might view these papers as a softening of the UK’s position and therefore come back to the negotiating table more warmly disposed failed to stop GBP/EUR from hitting that fresh low. This was partly because the euro was boosted by series of above forecast manufacturing, services, and composite PMIs for Germany and the Eurozone. Eurozone consumer confidence also improved instead of worsening, even if it did remain in pessimistic territory at -1.5. The US dollar is an unsteady form, with markets reluctant to get involved until after the Federal Reserve Chair Janet Yellen has given her speech at the Jackson Hole symposium on Friday. Some disappointing data, including a below forecast manufacturing PMI and a -9.4% slump in new home sales, failed to stop GBP/USD from stacking up further losses. |
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What's coming up? After a surprise downwards revision to June’s UK retail sales figures, markets are now worried that today’s second estimate for UK GBP may be cut from 0.3% to 0.2% - leaving the pace of growth unchanged on the first quarter. There is no Eurozone data set for release today, and nothing of note for the US. Given that speeches at the Jackson Hole symposium from both Janet Yellen and European Central Bank (ECB) President Mario Draghi are now less than 36 hours away, the pound could find some support as markets become more reluctant to touch the euro and US dollar. We’re here to talk currency whenever you need us, so get in touch if you want to know more about the latest news or how it could impact your currency transfers. |
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Phil McHugh,
Trading Floor Manager Phil provides dealing and hedging services whilst also helping to manage Currencies Direct overall market exposure. |
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