Broken Britain against Eurozone

It never rains but pours. The last couple of weeks have been particularly gloomy, not just for forecasts of what remains of the British summer, but also what remains of the competition between the pound and the euro, not to mention sterling hitting a 30 year low against the US dollar. What next? Seemingly, such large amounts of poor trader sentiment aimed at the pound (but seemingly not from Asian markets), in the main driven by the politics of the Brexit, has caused significant data releases lately, from the euro zone or from the UK, to be met with indifference and small movements, regardless of the figures quoted, positive or negative. A prime example occurred yesterday morning with exchange rates moving very lethargically and within a ten-pip range – the pound only losing ground of a significant half-cent against the Euro, much later in the day after American trading had opened.

 

Sunshine and Smiles in Europe

The ECB’s non-monetary policy meeting yesterday laid claim to a 0.6% rise in euro zone GDP, for the second quarter, shockingly double the growth figure published from the UK. With growth improving and inflation under control, it seems nothing can stop the positivity for Europe at the moment, barring a resurrection of the Greece/Germany/IMF bailout or more Italian banks needing to be rescued! Producer inflation on the continent also came in positively, although down on the previous, it was still above expectation. Construction figures from the UK however were down significantly, to an eleven month low from 54.8 and expected 54.5, to a mere 51.9.

 

Today

A very busy day ahead of us today, with perhaps one of the few eco stats that shoud cause some sort of significant market movement, the BoE interest rate decision, vote, asset purchase facility and monetary policy summary and report, all due at 12pm with Mark Carney due to speak half an hour later. There have already been a large number of inflation figures from various EU countries that were due by 9am coming in fairly mixed. US inflation, factory orders and employment data ends what will be a very busy day. Any further announcements regarding Brexit or data coming in outside of expectation threaten buyers of Euros to see large swathes of volatility, particularly after a relatively calm period in the markets, so keep in touch for some sound guidance from our team.