Despite better than expected GDP data from the UK this morning at 6am the strength of Sterling remains flaccid against the majors. GDP quarter on quarter (quarter 2) versus last year came in at 5.5% growth when analysts thought it would be a 1.5% correction and GDP year on year quarter 2 came in at 23.6% growth with analysts predicting 22.2% growth.
What that means in real terms is that the Pound remains out of favour with traders for the time being.
There are a number of contributing factors to this including more bullish data and sentiment in the Euro zone and a general risk off approach. This favours both the Euro and the Dollar for the time being.
Also, although borders reopen more fully on Monday, there still remains a relatively hawkish view when it comes to the UK’s number of Covid cases and the potential for hospitalisation numbers increasing as we head further into the Autumn. However the vaccine booster programme may help to mitigate some of these fears where the UK is expected to be ahead of the curve again.
Looking ahead there’s German inflation data out later which has a heavy bearing on the whole Euro zone, but mainly it will be the US GDP data out at lunch time here in the UK followed by the FED’s chairman giving a press conference. So keep an eye on rates this afternoon as there may be some volatility.
For those of you interested in the Yen there’s big data overnight from Japan with the Tankan Large Manufacturing Index out just before midnight.
As ever we look forward to keeping you in the loop and look out for our next update.
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Today’s Economic Calendar
GER: 12:00 Harmonised Index of Consumer Prices (inflation)
US: 12:30 GDP data year on year
US: 14:00 FED’s chairman press conference
JPN: 23:50 Tankan Large Manufacturing Index