Pound Sterling Jumps Up

Pound Sterling Jumps Up

A closely watched survey showed on Monday that, the UK services sector bounced back sharply in August from a slump caused by June's vote to leave the EU, decreasing the likelihood of a recession. Such survey repeated the hopeful tone of numbers released last week on the manufacturing and construction sectors in August.

Although, the UK’s economic growth outlook still looks set to slow down sharply, keeping the chance of another BoE rate cut alive before the end of the year. GBP settled at $1.33 vs. USD and traded in a limited range due to U.S. labor day.  

On the other hand, the U.S. dollar index settled at 95.70.

Also on Monday, Eurozone retail sales rose as much as 1.1% and 2.9% on a yearly basis in July, posting the largest monthly increase of the year after the UK's Brexit vote.

Despite such data, Euro failed to settle above $1.1150 negatively affected by Euro area inflation rate. From a technical point of view, fiber is unlikely to extend its gains above $1.12.

On Monday, USD declined vs. JPY after Bank of Japan governor Haruhiko Kuroda dashed investors’ hopes who had expected a clear signal that monetary policy would be eased this month.

Last Friday, USD hit a five-week high as markets bet that the U.S. Federal Reserve was still likely to hike interest rates before the end of the year, despite unexpected U.S. jobs data.

Oil prices hit its highest level in a week before shrinking gains after Russia and Saudi Arabia confirmed that they would cooperate to bring stability to the oil market. U.S. crude settled at $45.

The most important economic events:

  • EUR Euro-Zone Gross Domestic Product s.a. (YoY) (2Q F): (GMT 11:00) Important – Forecast (1.6%) – Previous (1.6%).
  • USD ISM Non-Manufacutring Composite (AUG): (GMT 16:00) Important – Forecast (55) – Previous (55.5).

The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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