UK: Weekly FX Market Update 21 August

GBP

• Holiday markets are here, however, sterling has remained resilient.

• UK Average Earnings hit 8.2% and Core CPI stays steady at 6.9%.

• Bloomberg analysts now expect UK rates to hit 6% - could this create new highs for the pound?

• UK Flash Manufacturing and Services PMI on Wednesday could provide direction this week.

EUR

• As GBPUSD grinds higher, EURUSD diverges lower.

• Previously hawkish ECB member Kazak turned dovish on Euro interest rates.

• Eurozone Industrial production jumped higher by 1% last month but couldn’t help the euro gain against the pound and dollar

• Can the euro overcome market worries about eurozone energy supply costs and sticky inflation?

• Last month Flash Manufacturing and Services PMI started the EURUSD decline. Will they stay negative on Wednesday?

USD

• The US economy is performing well and interest rates are expected to stay elevated into 2024.

• FOMC Meeting Minutes continued to note that inflation risks ‘could require further tightening’ - will this strengthen the dollar going forward?

• What message will the Federal Reserve give us at the Jackson Hole Symposium this week?

Main events for this week:

Mon Aug 21

No Top Tier Data

Tue Aug 22

All Day BRICS Summit

15:00 USD Existing Home Sales

19:30 USD FOMC Goolsbee and Bowman Speak

Wed Aug 23

All Day BRICS Summit

09:00 EUR Flash Manufacturing and Services PMI

09:30 GBP Flash Manufacturing and Services PMI

14:45 USD Flash Manufacturing and Services PMI

15:00 USD New Home Sales

Thu Aug 24

All Day BRICS Summit

All Day US Federal Reserve Jackson Hole Symposium

13:30 USD Unemployment Claims

Fri Aug 25

All Day US Federal Reserve Jackson Hole Symposium

07:00 EUR German Final GDP

09:00 EUR German IFO Business Climate

15:00 USD Revised UoM Consumer Sentiment