Market Brief: Pound awaits PMI data and MPC decision
03 Aug 2017
My next-door neighbours cut down a large tree that overlooked our kitchen yesterday, so I was excited to get home to see the new lease of light that flooded into the kitchen.
Latest rates | Today's data release | ||||||
---|---|---|---|---|---|---|---|
GBP/USD | GBP/EUR | GBP/AUD | GBP/AUD | GBP/CHF | 09:00 | EU composite PMI | |
1.3231 | 1.1164 | 1.6690 | 1.6673 | 1.2831 | 09:30 | UK services PMI | |
GBP/JPY | GBP/HKD | GBP/ZAR | EUR/USD | EUR/GBP | 12:00 | UK BoE rate decision and inflation report | |
146.41 | 10.3451 | 17.5289 | 1.1852 | 0.8956 | 15:00 | US durable goods orders | |
Investec currency forecasts as at 27 July 2017 | Key levels | ||||||
Q3 '17 | Q4 '17 | Q1 '18 | Q2 '18 | Support | Resistance | ||
GBP/USD |
1.29 | 1.30 | 1.30 | 1.31 | 1.3115 | 1.3251 | |
GBP/EUR | 1.13 | 1.14 | 1.13 | 1.13 | 1.1125 | 1.1247 |
Market overview
My next-door neighbours cut down a large tree that overlooked our kitchen yesterday, so I was excited to get home to see the new lease of light that flooded into the kitchen. I was not disappointed as the room was without doubt lighter and it was great to be able to see the sky – albeit through the torrential rain that was cascading down at the time!
Many will be hoping that GBP will be given a new lease of light from the Services PMI figures (09:30, expected at 53.5) and the Bank of England rate decision and inflation report at 12:00. With Services representing the largest sector in the economy its health is imperative for the continued growth in the economy and any weakness would have a detrimental effect on the pound. A bumper report may not have as great an impact as normal as market participants may be wary of the Bank of England two and a half hours later.
What to watch out for at 12:00? The last vote was 5-3 in favour of keeping rates on hold, and with Kristin Forbes having left (and being one who voted FOR a rate hike) markets are expecting a 6-2 outcome. Outside of this the other things to watch are whether the bank revises down its growth and inflation forecasts in light of recent data , whether there is any mention of the changing face of Brexit negotiations and how this affects growth and finally any more mentions of worries around consumer credit.
Outside of our Island nation the US stock markets powered to new heights as the Dow Jones sailed through 22,000 for the first time ever, it also marked the longest period since 2007 that the S&P has not had a day’s gain of more than 1%. This is interesting as many are worried about overvalued assets and the very low level of volatility attributed to them (those old enough to remember 2004-2007 will remember that feeling) and this has led to ever increasing hedges to protect against a fall in stock markets.
Many will be hoping that GBP will be given a new lease of light from the Services PMI figures (09:30, expected at 53.5) and the Bank of England rate decision and inflation report at 12:00. With Services representing the largest sector in the economy its health is imperative for the continued growth in the economy and any weakness would have a detrimental effect on the pound. A bumper report may not have as great an impact as normal as market participants may be wary of the Bank of England two and a half hours later.
What to watch out for at 12:00? The last vote was 5-3 in favour of keeping rates on hold, and with Kristin Forbes having left (and being one who voted FOR a rate hike) markets are expecting a 6-2 outcome. Outside of this the other things to watch are whether the bank revises down its growth and inflation forecasts in light of recent data , whether there is any mention of the changing face of Brexit negotiations and how this affects growth and finally any more mentions of worries around consumer credit.
Outside of our Island nation the US stock markets powered to new heights as the Dow Jones sailed through 22,000 for the first time ever, it also marked the longest period since 2007 that the S&P has not had a day’s gain of more than 1%. This is interesting as many are worried about overvalued assets and the very low level of volatility attributed to them (those old enough to remember 2004-2007 will remember that feeling) and this has led to ever increasing hedges to protect against a fall in stock markets.