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It’s Holiday Season, why are you sat at your desk?!

It’s Holiday Season, why are you sat at your desk?!

Yesterday’s empty economic calendar was reflected by the lack of trading volumes throughout the currency market. There was little volatility between all major pairs and news was dominated by other factors.

News in the UK came from the World Travel and Tourism Council (WTTC), who are predicting a growth of 3.6% in the UK’s tourism sector over the year. This is somewhat helped by a weaker currency, meaning Sterling’s woes aren’t all negative.

Sterling managed to strengthen throughout the European session yesterday, gaining slightly against both the Euro and the Dollar with the peak in the holiday season in London markets having a significant impact.

News regarding the uncertainty of the activation of Article 50 reinforced concerns surrounding the political environment. Today’s CBI data will be watched closely for further evidence of industrial developments since the EU referendum.

News from the Eurozone was also political rather than economic yesterday. German Chancellor Merkel praised Italian Prime Minister Renzi for his bold economic reforms. She also stated that rules on the EU budget cannot be bent to help underpin Italian growth. Renzi insisted that he would push ahead with reform plans despite weakening popular support. The Eurozone Flash PMI data will be scrutinised today for indications of economic trends, with a notable focus on the French data.

In the US, the Chicago National Activity index increased to 0.27 for July from 0.05 last month, with a further strengthening in the production index. With the market still fixated on when US interest rates will rise again, the relatively hawkish Fed rhetoric has failed to lift expectations of a September interest rate increase. There were no further comments from Fed officials during the day and underlying trading volumes remained very subdued. Trading volumes will remain very low over the next few days.

Data to watch: 8am German Flash Markit Manufacturing, Services & Composite PMI. 9am Euro Flash Markit Manufacturing, Services & Composite PMI. 14.45pm US Markit Manufacturing PMI.

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