Pound on the rebound?
Yesterdays BoE meeting passed without incident and initial research showed the UK is on track to meet a 0.8% growth estimate in Q3. The fact that GBP has moved toward 1.1800 versus EUR demonstrates some relief from the market that the events were not negative for the Pound, albeit not particularly positive either.
As GBP/USD heads back toward 1.60, is it USD weakening because a lack of confidence in the US economy? Actually, no. As the US eases closer to an agreement on the debt ceiling, potentially opening the Government for business again USD has started to weaken again. This may seem illogical but it is confirmation that the US Dollar is responding to risk sentiment as a result of its status as a global funding currency i.e. If the environment is more stable in the US then market participants are more willing to invest in other assets/currencies rather than holding funds in the most liquid option (USD).
Today’s only significant scheduled data release is Canadian employment figures at 1.30pm UK time. However once the US opens the news is bound to be dominated by the Government shutdown saga.