Beware of currency volatility this Bank Holiday Weekend
Sterling was unable to continue its run of form against it’s peers yesterday as the recent recovery it had shown started to fade. The latest CBI retail sales survey was stronger than expected with a strong rebound to 9 for August from -14 previously. Retailers overall remained optimistic with stronger capital spending plans which will also support expectations surrounding the short-term economic outlook.
Consumer confidence figures also jumped to 109.8 in August, up by 3.2 points which was the largest gain seen in three and a half years. UK retailers also remained optimistic as stronger spending continues which will affect the short term economic outlook of the UK in a positive way. The Pound ended the day at around the 1.3192 levels versus Dollar and 1.1686 against the Euro.
UK GDP figures later this morning will grab attention as investors will be keen to see any post-Brexit change. There is a risk of unpredictable market movements this afternoon as Janet Yellen delivers her awaited speech at Jackson Hole and UK traders close positions ahead of the Bank Holiday weekend.
The US Dollar recorded gains of half a percent against Sterling in yesterday’s European trading session. US Durable Goods Orders rose by a seasonally adjusted 4.4% in July. This was the largest monthly advance since October and came well above the slated 3.5% rise.
Volatility in the Cable will be seen as the US GDP Q2 figures are due at 3pm. Consensus has been revised 0.1% lower from the 1st quarter figure of 1.2%. At 4pm Janet Yellen’s speech at the Jackson Hole Symposium will be dissected for clues as to when we will see a US interest rate hike.
In the Eurozone, German Business Confidence for August unexpectedly dropped to the lowest level in 6 months. German IFO Business Climate dropped from last month’s 108.3 figure to 106.2, despite the market expecting an increase to 108.5.
Data to Watch: 7am EUR GfK German Consumer Climate. 9am EUR M3 Money Supply YoY. 9:30am GBP Second Estimate Q2 GDP, Prelim Q2 Business Investment. 1:30pm USD Prelim Q2 GDP, USD Goods Trade Balance. 3pm USD QUEEN YELLEN speaks, Revised UoM Consumer Sentiment.