Here’s what happened to the GBP:
- On Thursday, The Markit Purchasing Managers’ Index for the manufacturing sector came in at a higher than expected 53.3, while on Friday, the PMI for the construction industry also showed an increase to the previous month. Overall UK consumer confidence has also shown an increase.
- Following the release of Thursday’s manufacturing PMI the pound increased by 1.1% against the US dollar, to 1.32737 and against the euro, it increased by 0.7%.
- On a weekly basis, the GBP/USD increased by 1.3% & the EUR/GBP decreased by 1.7%.
- So even though this week, the pound has proven resilient since the Brexit vote, it has dropped in value by more than 10% against both currencies since the referendum.
Across the Atlantic the US dollar has also been feeling the pinch:
- Last Friday’s NFP came in at a disappointing 155k against an expectation of 188k
- While the unemployment rate remained unchanged at 4.9%, wage growth also disappointed with a 0.1% rise versus an expectation of 0.2%
- The Dollar dropped as a result but recovered quickly. Overall the dollar index ended the week slightly lower at 95.88.
- Expectations for a rate hike decreased for both September & December, & many analysts are expecting the Fed to put any decision on hold until the presidential elections in Nov.
Coming up this week we have:
- One of the most important economic releases of the week – the EU interest rate decision on Thursday at 11:45 GMT.
- The ECB has left interest rates unchanged during their last meeting but said that it would be ready to intervene with additional stimulus measures in case that the UK’s decision to leave the EU would begin to weigh on the Eurozone’s economy.