End of month Market Overview

Last week was another bad week for the pound with heavy losses taken against all major currencies, including some of the weakest currencies such as the Aussie Dollar that even managed to make small gains against sterling. With an absence of any data, the negative trend and sentiment drove the pounds value to a level where we are now seeing the lowest buying levels against the Euro and US Dollar in the last 5-6 months.

The US Dollar was the big gainer once again, particularly after Janet Yellen reassured the markets that a lift off in rate hikes was still very likely before the end of the year, all be it most likely in November of December. Further gains were also seen on Friday afternoon after a positive GDP figure for the US, exceeding 3.7% expectations with a result of 3.9% on the year. The rate hike delay is likely to keep pressure of GBP/EUR that could very easily test lows near 1.30 in the coming weeks before finding further support, particularly as the markets are still adjusting rate hike delays in the UK that are looking more and more likely to be Q2 of 2016.

The week ahead brings the end of one month and the start of the next, so data is relatively quiet today and tomorrow but really gathers pace with daily key announcements from Wednesday onwards. With this data comes considerable downside risk considering the pounds current trend and the amount of data releases that have disappointed in the last month. Anyone still holding out for better exchange rates may wish to consider trading sooner than later if your needs are within the month or so.

The main events on the economic calendar this week are detailed as below:

Monday:
1:30pm (US) – Personal Consumption Expenditures / Pending Home Sales

Tuesday:
10:00am (EUR) – Consumer Confidence
3:00pm (US) – Consumer Confidence

Wednesday:
9:30 am (UK) – Gross Domestic Product
10:00am (EUR) – Consumer Price Index / Unemployment Rate
1:15pm (US) – ADP Employment Change

Thursday:
9:00am (EUR) – Manufacturing PMI
9:30am (UK) – Manufacturing PMI
12:30pm (EUR) – ECB Monetary Policy Meeting Accounts
3:00pm (US) – ISM Manufacturing PMI

Friday:
9:30am (UK) – PMI Construction
10:00am (EUR) – Producer Price Index
1:30pm (US) – Nonfarm Payrolls / Unemployment Rate