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UK: Weekly FX Market Update 14 August

CalendarAugust 14, 2023
  • Will the UK economy continue to grow despite its issues of high inflation, labour shortages, a possible housing crisis and higher interest rates?

  • Or will it decline and fall into stagflation as the National Institute of Economic and Social Research (NIESR) expects?

  • Last Fridays GDP beat the forecasts and showed 0.5% monthly growth, 0.2% quarterly growth and a 0.4% yearly gain – and yet there wasn’t any significant impact on the pound.

  • UK unemployment data is released this Tuesday and UK CPI is released on Wednesday.

  • If unemployment and CPI jump higher, that could show a step towards the NIESR stagflation path and produce a weaker pound.

  • If unemployment stays steady, or even declines, and inflation moves lower as expected, could sterling strengthen?

  • At the start of the Ukraine war, the euro weakened on news of energy price rises and threats to pipelines being closed.

  • Last week, Liquid Natural Gas prices spiked higher by 40% over fears of an Australian worker strike.

  • The euro was relatively unmoved, but Goldman Sachs is warning that European prices could double or even triple this winter.

  • Could these issues illicit the same euro weakness response?

  • US GDP is 2.4% , Yearly US CPI is now a pleasing 3.2% and the US continues to add new jobs with 187k added in July. What will the Fed decide in September and how will the market react?

    • Would a hold on rates be treated as a reason to sell the dollar as the hiking cycle comes to an end?

    • Or will this be regarded as positive reflection on the US economy, with a ‘soft landing’ expected, and a period of US Dollar outperformance against the pound and euro?

Main events for this week:

Mon Aug 14

No top Tier Data

Tue Aug 15

All Day France and Italian Bank Holiday

02:30 AUD MPB Meeting Minutes

03:00 CNY Industrial Production

07:00 GBP Claimant Count Change/Average Earnings/Unemployment Rate

10:00 EUR German ZEW Economic Sentiment

13:30 CAD CPI

13:30 USD Retail Sales

16:00 USD FOMC Kashkari Speaks

Wed Aug 16

03:00 NZD Official Cash Rate

04:00 NZD RBNZ Press Conference

07:00 GBP CPI

10:00 EUR Final GDP

13:30 USD Building Permits

14:00 USD Industrial Production

19:00 USD FOMC Meeting Minutes

Thu Aug 17

02:30 AUD Employment Data

13:30 USD Unemployment Claims

Fri Aug 18

07:00 GBP Retail Sales

10:00 EUR Final CPI


Trevor Charsley

Trevor Charsley

Senior Market Strategist

Trevor has over 25 years' trading and sales experience. He produces regular market and technical analysis as well as help with the structure and management of FX hedging policies. Trevor is often listed among the top "currency forecaster on Bloomberg".