- Yesterday was another fairly muted session for currencies with markets stuck between corporate month end flows and true month end flows expected today. US GDP data was revised up a tad to 1.4%, however consumer spending was revised sharply lower from 2.0% to 1.15%. Overall, recent data does not suggest that the US economy is facing an aggressive rate easing cycle, however markets will today be focusing on the release of the PCE data, which is the Fed’s preferred inflation gauge. We have waited all week for the most important data release, and analysts are expecting monthly core PCE inflation to register its slowest pace all year.
- The US held its first Presidential debate last night, where Biden has several stumbles and his voice sounded somewhat soft, however as expected Trump came across loud and spoke strongly. Biden criticised Trump’s proposed tax cuts and Trump called for higher tariffs, ignoring the impact for inflation and the economy. Voters have rated the economy as one of the defining issues of the campaign, with voters sceptical of Biden’s record despite solid job growth.
- Data released this morning showed that the UK economy grew more than previously expected during the first three months of the year with GDP expanding 0.7% in the first quarter. The above consensus print was driven by services, as well as consumer spending which came our better than expected. The print showed the fastest growth in two years and will likely be used as an argument by PM Rishi Sunak ahead of next weeks election. The pound has barely reacted to the news and continues to consolidate in the low 1.26’s, well within its recent trading range.
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