Although GBPUSD rates have bounced off recent lows, sterling still looks vulnerable to any further bids for the US dollar going into this Friday’s Jackson Hole testimony, and expected hawkish comments from Fed Chair Powell. Rising gas prices look set to continue to add inflationary pressures and provide a stagflationary outlook for the UK, keeping pressure on the pound. The CBI retail sales report will be out this morning.
Similarly to GBPUSD price action, we saw the euro clawing back recent losses versus the US dollar. But again like above, rising gas prices will likely keep selling pressure on the euro. In focus today is the release of the minutes from the recent ECB meeting, where the bank hiked rates by 0.5% and dropped forward guidance. The ditching of the latter make these minutes valuable in terms of indicating what the next hike is likely to be. German GDP figures came in better than expected this morning, and later we have the IFO report on business conditions in Germany.
Dollar data was mixed yesterday with durable goods missing the mark, but new home sales came in marginally better than expected. However, it’s worth noting sales are still 13% lower than last year, reflecting the impact of higher interest rates.
The dollar has softened overnight following stimulus measures introduced in China, causing some risk appetite to flow into markets. Markets still await Fed Chair Powell’s speech at Jackson Hole on Friday but before then, today, we have the weekly jobless claims, second estimate of second quarter GDP, and the core PCE index for August.
Equals. Morning Report- 25th August 2022
Today’s Interbank Rates at 09:19 am against sterling movement.
GBP>EUR – 1.1835
GBP>USD – 1.1830
EUR>USD – 0.9996
GBP>CAD – 1.5278
GBP>AUD – 1.6959
GBP>SEK – 12.501
GBP>AED – 4.3451
GBP>HKD – 9.2830
GBP>ZAR – 19.977
GBP>CHF – 1.1383
· 12:30 USD Gross Domestic Product Annualized(Q2)
· 14:00 USD Jackson Hole Symposium
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