UK: Weekly FX Market Update 18 August

GBP

· Better than expected quarterly UK GDP at +0.3% kept Sterling supported last week.

· Now that the BoE has forecast 4% inflation later this year, will CPI be strong on Wednesday?

· With flash PMI released on Friday, could that help support the Pound also?

EUR

· Eurozone quarterly Flash GDP showed measly growth of 0.1% last week.

· Could this mean that Investors will be less keen to buy Euro’s against the Pound or USD?

· Could a ceasefire/peace talks in Ukraine help the Euro?

USD

· US Consumer Price Index was weaker than expected last week, however, the US Producer Price Index was far stronger than forecast.

· Could this mean that higher inflation is coming in September/October for the US? Goldman Sachs forecasts that 70% of tariff price increase will be borne by the consumer in ‘the fall’.

· Will stronger US prices produce dollar strength as a consequence of removing Fed rate cuts? Or will the market point to labour market weakness and talk of stagflation as reasons for investors to sell the greenback?

Main events for this week:

Mon Aug 18

10:00 EUR Trade Balance

Tue Aug 19

13:30 CAD CPI

13:30 USD Housing Starts

Wed Aug 20

07:00 GBP CPI

10:00 EUR Final CPI

19:00 USD FOMC Meeting Minutes

Thu Aug 21

All Day Jackson Hole Symposium

09:00 EUR Flash Manufacturing & Services PMI

09:30 GBP Flash Manufacturing & Services PMI

13:30 USD Unemployment Claims

14:45 USD Flash Manufacturing & Services PMI

15:00 EUR Consumer Confidence

Fri Aug 22

All Day Jackson Hole Symposium

07:00 EUR German Final GDP

07:00 GBP Retail sales

Sat Aug 23

All Day Jackson Hole Symposium

17:25 GBP BoE Gov Bailey Speaks