UK: Weekly FX Market Update 9 September

GBP

• After last weeks slightly weaker than expected US employment report, GBPUSD initially pushed higher again on expectations of a possible 0.5% US rate cut from the Fed on September 18th.

• This week, UK average earnings and GDP are released. Can they encourage the Bank of England to hold rates steady, as Bloomberg analysts currently expect, and help propel GBPUSD to another new yearly high?

EUR

• France finally gets a new Prime Minister, with Chief Brexit negotiator Barnier now tasked with forming a new government. The result may produce a coalition that relies on the Far-Right National Rally as king maker.

• The ECB sets interest rates on Thursday, with the market having fully priced in a 0.25% rate cut.

• Will President Lagarde indicate more rate cuts to come in October? Or suggest another period of waiting before the next policy change?

USD

• US Non-Farm Payrolls were expected to show 164k new jobs had been added to the US economy in August. However, they disappointed, with only 142k.

• The unemployment rate was better than July at 4.2%, rather than 4.3%, and Monthly Average Hourly Earnings rose by 0.4% rather than July’s 0.2%

• Despite these positives, the market on Friday initially suggested a 50% chance of a 0.5% rate cut on September 18th.

• US CPI is released on Wednesday. Will it fall to 2.6% as some analysts suggest?

Main events for this week:

Mon Sep 9

No top tier data

Tues Sep 10

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

13:10 CAD Bank of Canada Governor Macklem Speaks

Wed Sep 11

07:00 GBP GDP/Construction Output/Industrial production

13:30 USD CPI

Thu Sep 12

13:15 EUR ECB Sets Interest Rates/Statement

13:30 USD Producer price Index/Unemployment Claims

13:45 EUR ECB Press Conference

Fri Sep 13

09:30 GBP Consumer Inflation Expectations

15:00 USD Preliminary UoM Consumer Sentiment/Inflation Expectations