Yesterday saw the Office for National Statistics publish the United Kingdom GDP figures. GDP growth was slightly slower than expected at 0.2% for July, helped by the services sector with the hosting of the Women’s Euro Championship and strong second-hand car sales figures. The ONS said that growth was flat between May and July compared to the three months before as production and construction shrank in July. Industrial production shrank by -0.3% and manufacturing production grew slower than expected at 0.1% compared to the expected 0.4%. However, the UK trade balance deficit decreased faster than expected as it now stands at £-19.36bn compared to the expected £-22.30bn, pushing cable by 0.51% yesterday to reach 1.1679 at closure.
In Europe today saw alarming figures for the ZEW Economic Sentiment in Germany. Investors and analysts remain extremely pessimistic as the numbers show a very negative reading of -61.9 as Germany inflation figures showed that inflation progressed to 7.9% and slow Chinese manufacturing activity due to lockdown restrictions. Spain sees even more alarming figures as the country reaches 10.5% inflation for August. However, the Eurozone ZEW Economic Sentiment outperforms expectations and reaches a positive figure of 60.7 compared to the expected -58.3, pushing EURUSD at 1.0144 at 9am BST.
The United States are also about to receive the latest inflation figures this afternoon ahead of next week’s Fed interest rate decision. Market expectations see inflation slowing down for August despite a higher reading for core inflation (excluding food and energy). The reading can be seen as confusing but as gasoline prices drop, the domino effect will take more time to see core inflation slow down. Inflation is expected to fall to 8% in August, down from 8.5% in July.
Cable saw the pound recover on the previous week’s losses yesterday. GBPUSD opened at 1.1596 and closed at 1.1679.
GBPEUR remained stable as both currencies performed well. The pair opened at 1.1549 and closed at 1.1541.
EURUSD saw the euro recover over a positive outlook on the Eurozone economy and last week’s ECB interest rate hike. The pair opened at 1.0080 and closed at 1.0119 yesterday.