Marketwatch EU & UK

Daily Insights
July 17, 2024

  • The pound posted gains this morning after UK inflation held steady for the second straight month, bang on the Bank of England’s 2% target. The print was above the 1.9% that analysts were predicting, suggesting that persistent inflation remains – persistent. Services inflation, which members of the MPC have been watching of late, for signs of domestic price pressures, also held steady at 5.7%, which is higher than the central bank predicted in its latest forecasts. Officials on the MPC have recently expressed concerns about sticky inflation, particularly in the labor market and services sector, so this morning’s data will be closely scrutinised and taken into consideration when the committee next meets on the first of August. The above consensus print has not completely taken a cut next month off the table, but it makes it a harder decision for rate setters on the MPC. Just yesterday, the odds of a 25bp cut next month sat around 40% – this morning those odds have been reduced to just 25%.
  • GBPUSD rose to the day’s high, reversing its recent decline to once again test the high 1.29’s. Cable has so far failed to breach last week’s one year high at 1.2995 with resistance seen at the 1.30 psychological level ahead of the July 2023 high of 1.3142.
  • Yesterday’s US Retail Sales release came in stronger than expected, with much of the increase attributed to seasonal factors, suggesting that the increase is not a real signal of strength. Equity markets and the greenback rallied with the attention now shifting to today’s Capacity Utilisation numbers and release of the Fed’s Beige Book.
  • The single currency continues to consolidate around 1.09, ahead of the release of final CPI data for June. Markets are looking for a small dip in June to 2.5% from the 2.6% recorded in May suggesting that inflation remains on a path towards the ECB’s target. The release comes a day before the ECB policy meeting, with markets continuing to expect officials to keep policy unchanged, with a September cut more likely.

Economic Calendar

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AUD - MI Leading Index m/m
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GBP - CPI y/y
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GBP - Core CPI y/y
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GBP - PPI Input m/m
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GBP - PPI Output m/m
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GBP - RPI y/y
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GBP - HPI y/y
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EUR - Final Core CPI y/y
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EUR - Final CPI y/y
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EUR - German 30-y Bond Auction
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CAD - Foreign Securities Purchases
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USD - Building Permits
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USD - Housing Starts
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USD - FOMC Member Barkin Speaks
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USD - Industrial Production m/m
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USD - Capacity Utilization Rate
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USD - FOMC Member Waller Speaks
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USD - Crude Oil Inventories
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USD - Beige Book
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JPY - Trade Balance

Market Indicators

Currency Pairs
Pair High Low
eur/gbp 0.84077 0.83997
gbp/usd 1.29784 1.2966
gbp/aud 1.92844 1.92427
gbp/nzd 2.1386 2.13297
usd/jpy 158.623 158.127
eur/usd 1.09068 1.08954
gbp/jpy 205.682 205.066
eur/cnh 7.94755 7.9382
usd/cnh 7.29173 7.28378
Equities and Commodities
Nasdaq 100 20341.2
DOW 41022.7
S&P 500 5664.31
BRENT CRUDE 83.57
WTI 80.6
GOLD 2468.51

This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.

About Simon Walker

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Simon Walker is head of the GPS Capital Markets trade desk in our London office where he is responsible for covering market risk in European hours. He has over 25 years’ experience in foreign exchange, working in both sales and trading.