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Aggressive moves for the Pound next week – Argentex Daily Commentary

GBP
It’s been a very data light week for the pound, with only GDP, which met expectations of 0.7% growth, and Net Lending to Individuals which came in slightly higher than expected, not that this is seen as a particularly market moving figure anyway. There’s been some chatter around rate hikes from the BoE, which has helped keep the pound moderately strong. Next week we’ll very likely see some fairly aggressive moves in the pound, with Manufacturing and Services PMI released ahead of a monster day on Thursday, when the BoE Rate announcement is released for the first time alongside the minutes of the meeting. On the same day we’ve got Manufacturing Production and the Inflation Report, so volatility is a given. Against the dollar Morgan Stanley, Danske and Credit Suisse hold long positions expecting between 1.57 and 1.60.

 
USD
A good amount of data from the US has been on balance negative, with consumer confidence hitting lows not seen since November last year, Pending Home Sales contracting by 1.8% and GDP printing 2.3% on an annualised basis against expectations of 2.6%. Speculation still abounds in the market over whether the Fed will hike in September (there’s no meeting in August), although the market still sees more chance of a first move in October. Equities have had a turbulent week, but it hasn’t translated into much dollar movement. Next week Trade Balance and Non-Farm Employment headline.

 
EUR
Data from the Eurozone has been fairly poor this week, with Spanish CPI and GDP both missing expectations yesterday, whilst German Retail Sales released this morning came in far lower than expected at -2.3% against expectations of 0.3%. The single currency has drifted around somewhat this week, trying to find its footing in a post-Greek potential Grexit (at least for now) environment. Next week is fairly light for the euro in terms of data, with Spanish Manufacturing PMI on Monday, Spanish Unemployment on Tuesday, Spanish Services PMI on Wednesday and German Factory Orders on Thursday. Danske and Barclays are still holding their short euro positions against the dollar, targeting around 1.04.

 

UK HEADLINES
Telegraph – IMF withholds support for a new bail-out deal for Greece.
Independent – Business leaders call on PM to make Heathrow runway decision.
BBC – Lloyds bank PPI bill tops £13bn.

 

Pound Sterling (GBP), Euro Currency (EUR), US Dollar (USD) exchange rates commentary is provided by Argentex (Ag-Fx.com)