Sterling Under Pressure Following a Poor Week for UK data and a Better-than-Expected US Jobs Report

Xe Corporate Europe

2019年7月8日 2 min read

US News

The US created more jobs than expected in June further reducing the probability of a 50 basis point cut in interest rates at the end of this month. A 25 basis point cut is still expected but following the positive employment report and progression of US/ China trade talks at the recent G20 summit this is by no means a done deal.

This week the minutes of the last Federal Reserve meeting will be released but with recent positive developments in the US the main focus will be on Jerome Powell’s testimony before the House Financial Services Committee in Washington on Wednesday as markets look for a more up to date assessment of the Federal Reserve’s view on the likely path of interest rates in the US.

UK News

Protracted Brexit uncertainty is continuing to weigh on the UK economy with PMI data for Services, Manufacturing and Construction all coming in below expectations last week. The office for national Statistics confirmed that UK productivity declined for the third quarter in a row for the first quarter of 2019. It was no real surprise that Mark Carney also confirmed that UK business investment has flat-lined since the referendum and is holding back foreign direct investment.

UK GDP & Manufacturing data is released on Wednesday. There seems little reason for investors to buy the pound currently which at the time of writing is close to the low of the year against the dollar at 1.2530 and continues its week on week decline against the euro at 1.1160.

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