UK: Weekly FX Market Update 19 August

GBP

• Last week’s UK CPI release showed that inflation within the important services sector slowed by more than expected.

• Despite Bloomberg analysts now expecting two more UK rate cuts for 2024, the pound took this in its stride and gained 1.5% on the week.

• UK Purchasing Managers Index (PMI) data could be the main UK data release on Thursday.

• However, the biggest market mover may be the Federal Reserve’s (Fed) Jackson Hole central banker symposium starting on Thursday.

EUR

• As the market focuses on the US Federal Reserve and its possible plans for cutting interest rates, EURUSD quietly trades above 1.1000 again.

• Will Eurozone CPI on Tuesday reflect sticky inflation again or give the ECB a chance to cut rates in September?

• PMI data is due for release this Thursday. Last month it didn’t make great reading for the Eurozone, will we get a repeat performance?

USD

• Annual US CPI is now back below 3%. Will this allow the Fed to cut rates on September 18th?

• The Fed hosts it’s Jackson Hole symposium on Thursday for three days. All eyes and ears will be focusing on Fed Chair Powell, who speaks on Friday.

• With the market currently suggesting that four US rate cuts by the end of 2024 is possible, will Powell’s speech temper these expectations?

Main events for this week:

Mon Aug 19

14:15 USD FOMC Waller speaks

Tue Aug 20

02:30 AUD Monetary Policy Meeting Minutes

10:00 EUR Final CPI

13:30 CAD CPI

18:35 USD FOMC Bostic Speaks

Wed Aug 21

07:00 GBP Public Sector Net Borrowing

19:00 USD FOMC Meeting Minutes

Thu Aug 22

All Day Jackson Hole

09:00 EUR Flash Manufacturing and Services PMI

09:30 GBP Flash Manufacturing and Services PMI

13:30 USD Unemployment Claims

14:45 USD Flash Manufacturing and Services PMI

15:00 EUR Consumer Confidence

Fri Aug 23

All Day Jackson Hole

13:30 CAD Retail Sales

20:00 GBP BoE Gov Bailey Speaks