- The final piece of UK data for the week was released this morning and provides some optimism that the worst of the cost-of-living crisis may be behind us. Warmer weather helped to boost UK Retail Sales, with the volume of goods sold in shops and online rising 0.5% in July, further aided by discounts in departments stores on item such as sporting goods. At the same time, the previous month’s fall of 1.2% was revised higher to a fall of 0.9% suggesting a more solid start to the third quarter. The picture for the UK and particularly consumers looks a little brighter with inflation close to the BoE target, companies hiring at the strongest pace since November and lower interest rates, with more cuts in the pipeline. The pound is consolidating below 1.29 after a busy week of data releases from both sides of the pond.
- This week’s data from the US has given investors some comfort that the world’s largest economy is likely to avoid a recession, after the market reacted poorly to a below consensus employment market report for July. Markets now seem more assured of a “goldilocks” scenario where the outlook appears not too hot or too cold, with inflation contained without stalling growth. This renewed more positive outlook was boosted by improved Retail Sales and a lower-than-expected weekly jobless report.
- EURUSD continues to consolidate below 1.10 after breaching the key psychological level earlier this week. The pair has so far failed to hold on to its gains peaking at 1.1040 before drifting lower. The attention will start to shift to the Fed’s annual Jackson Hole Symposium which starts next week and Fed Chair Jerome Powell’s keynote speech on Friday. Markets will likely hang on his every word, looking for clues on the timing and size of the Fed’s first interest rate cut of the cycle.
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