Weale talks down the Pound
Sterling remained confined within a broad trading range yesterday, struggling for direction in absence of any tier one economic releases from the UK. The CBI report was released yesterday and there was a substantial slide in business confidence to -47%, the lowest level since 2009. Optimism about UK export prospects for the year ahead also fell to -11%.
On the basis of weaker than expected PMI data, Monetary Policy Committee member Weale’s commentary piece in the FT stated he now has no objection towards further monetary stimulus. Weale said that the PMIs were very material to next week’s decision and he had also expressed concern over soft wage growth even before the Brexit referendum.
The Euro printed gains versus Sterling of just over half a percent during yesterday’s European trading session as upbeat German IFO data for July showed no signs of Brexit stress on the Eurozone economy. IFO business climate, expectations and current assessment for July beat all previous figures, showing signs of resilience in the German manufacturing sector. The single currency ended the day at around the 1.1914 levels against the Pound.
The U.S. Federal Reserve’s two-day policy meeting that begins later today will conclude with the release of the minutes which will take centre stage tomorrow. Ahead of the meeting the Dollar has fallen against both the Euro and the Yen.
Minutes from the last Federal Open Market Committee meeting stated that the Fed will have to wait for additional information to judge the consequences of Brexit on global financial conditions and the U.S. economic outlook. Today’s US Consumer Confidence data will be examined for further evidence on potential spending and labour market trends.
Data to Watch: 9:30am GBP BBA Mortgage Approvals. 2:45pm USD Flash Services PMI. 3pm USD CB Consumer Confidence.