Morning Update – Limping to the finish line

Even though it has been a quiet week on the data front, I think the finish line will come as a welcome relief for GBP, come the end of play today.

GBP

Sterling finally steadied yesterday near 11 month lows across the board. Fingers crossed when markets reopen after the weekend,GBP manages to hold around these levels. Failing that, we could see the charge to the bottom as the week unfolds. 1FX’s predictions are unfortunately in line with Commerzbank, forecasting at least a 10percent drop in GBP with a ‘no deal’ Brexit.

Finally some good news this morning! Our economy grew by 0.4% this quarter. That is up from 0.2% in the first 3 months of the year, as we are now starting to gain some traction after a long miserable winter. Interestingly manufacturing figures are down again, much like powerhouse Germany;

EUR

A story run by the Financial Times has finally hit EUR since it has been treading water all week. The FT said the European Central bank is worried on EU banks’ exposure to Turkey in light of the collapse of the Turkish Lira. Add next week to the mix, we have more German data. Cast your mind back to our blog last Wednesday where it came to 1FX’s attention that German manufacturing figures unusually missed the mark. Next Tuesday we have German GDP figures and should we fall below expectations, EUR will have to weaken further. Any weakness we suggest looking at placing some cover if you’re a seller of GBP.

USD

We promised ourselves not to mention Trump today so here it goes…

Next psychological support level for GBP/USD is 1.21; worrying. GBP has lost more than 10 percent vs USD since April, only 5 percent away from the lows we saw in June 2016. The run on USD has been exceptional with data constantly exceeding expectations. CPI figures are released early this afternoon. Anything above 2.3 percent and we will see USD to continue its charge.

Next week we have US retail sales. Due to the weather and high employment, expect the run to continue!

Have a good weekend, enjoy the last day of summer.

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