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Market overview

The annual Jackson Hole symposium, held in Wyoming, starts today and finishes Saturday. Although proceedings will probably not fully get underway until tomorrow (the official timetable is published tonight), senior global central bankers tend to air their views from the fringes early on. The key speeches are expected to come from Draghi and Yellen. However, Draghi is reportedly not giving markets any steer on monetary policy, preferring not to pre-empt a full debate at the 7 September ECB Governing Council meeting. According to newswire sources his speech will reflect ‘Fostering a Dynamic Global Economy’, the title of the symposium. While we do not yet have a timetable for the specific events, Yellen is expected to speak at 15.00 UK time on Friday on financial stability related matters. But it is not impossible that we will get policy clues from either or both of them, and of course from other central bank attendees.

The Euro strengthened against other major currencies in the European session on yesterday, after data showed that Eurozone private sector activity maintained strong growth momentum in August. Data from IHS Markit showed the Eurozone flash manufacturing PMI climbed to 57.4 in August from 56.6 in July. In contrast, it was forecast to decline to 56.3. The flash composite index rose slightly to 55.8 in August from 55.7 in July. Meanwhile, economists had expected the index to fall to 55.4. At the same time, the services Purchasing Managers' Index dropped to a 7-month low of 54.9 in August from 55.4 in July. The index was expected to remain stable at 55.4. This data release poured further misery on the GBPEUR rate, hitting fresh 8 year lows.

Sterling fell below $1.28 for the first time since late June yesterday and deepened recent losses against the euro. Concerns about Britain's economic prospects and the Brexit process encouraged investors to push the pound lower. The Government is striving to move forward the formal discussions on leaving the European Union with a series of position papers that have outlined potential compromises over some of the issues likely to block progress this year. Analysts again praised signs from another paper yesterday that Prime Minister Theresa May was seeking ways to resolve an argument over the influence of EU courts after Britain leaves, but markets have so far been unimpressed. In trade-weighted terms, the pound is down around 3 percent since the start of August.

The day ahead

This morning we see the release of the second estimate for Q2 UK GDP figures where Investors will be watching closely to see whether the preliminary +0.3% growth rate stands unrevised. At the same time the UK Mortgage Approvals data for July will be released by the BBA, followed by the CBI Distributive Trades survey at 11am. All quiet from the EU today so we head Stateside for weekly jobs data, home sales data for July and the Kansas City FED manufacturing data for August. 

Thought of the day

It was 115 years ago this week that Theodore Roosevelt became the first President of the United States to ride in an automobile. Theo undoubtedly would have been holding onto his seat, for fear of being driven off road and into a ditch. Fortunately the journey went smoothly and every American president since, has not had to think twice about being moved about by horse and carriage! Whilst Janet Yellen, the Fed Chair, will likely not be at all concerned about the automobile that transports her from her hotel to the Jackson Hole symposium today - we do hope her ride goes smoothly. Her speech, as well as that of ECB President Mario Draghi, looks to be the major event keeping FX traders around the country focussed on their jobs today, rather than looking forward to the Bank Holiday weekend that lies ahead!

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