Sterling up on GDP data

Today's Highlights

Sterling up on GDP data

US Federal Reserve scrutiny ahead

FX Market Overview

The highlight on Tuesday was the 1st estimate of British economic growth for the 2nd quarter of the year. The 0.7% quarterly growth figure was at the upper end of expectations and Sterling dutifully strengthened as a result. There was nothing rampant about the Pound's rise; just an orderly gain of half a cent or so here and there. Traders may gain a little more enthusiasm for the Pound if this morning's mortgage and consumer credit data is positive. We are expecting the number of mortgage approvals to have risen to 66,000 or so, after 64,400 last month and consumer credit to have risen by just over 1.0%. If those figures are accurate or even a little cautious, Sterling has room for further strength. The CBI distributive trades (retail to you and I) survey is likely to be upbeat as well, so Sterling buyers may get their opportunities in later trade. Having said that, the International Monetary Fund has just announced they think Sterling is overvalued by between 5% and 15%, so we will now see who trusts IMF forecasts.

Other than that, this afternoon is largely devoid of economic data but traders will be poised awaiting the decision on interest rates from the US Federal Reserve. Janet Yellen isn't going to shock us all with a change of rates today but the statement that accompanies the 'no-change decision' will be of interest. The markets are all trying to 2nd guess when the US will start the 'normalisation' of US interest rates with the first rate hike. The US Fed Funds rate has been set at a variable 0% - 0.25% since 2008 but the unsteady US recovery is edging the Fed nearer to a pre-emptive rate hike and the timing of that will be important for international investors. Any hint that this could happen sooner than September will strengthen the US Dollar, so please beware of that. Traders may wait until tomorrow's US economic growth data before getting heavily involved. A solid rebound from Q1's negative 0.2% figure is forecast. Some are even looking for 3.0% growth on the quarter. If that is true, the USD will have every reason to strengthen.

We saw a little bounce in the Chinese stock market at the very end of trading in Shanghai. No one seems to know whether that was just opportunism from some investors or manipulation by the authorities. I'll let you know when we know.

And I suspect US dentist Walter Palmer may be looking for new clients after it was revealed he was the man who killed famous 13 year old lion, Cecil after he was lured outside the Hwange National Park by guides. In a statement, Mr Palmer regretted the fact that he had killed Cecil but was clearly not apologetic about killing an amazingly beautiful and increasingly rare big cat. Apology not accepted I am sorry to say.

Oh and Kim Jong Un, he of the odd hair and murderous tendencies, has used the anniversary of North Korea's 'victory' over America to call for the death of all Americans. So situation normal then!