GBP made decent gains against the single currency last week when we saw it hit 1.43 – news that was coupled with Q/Q GDP figures which revealed how the UK’s economy grew 0.7% which is the highest reading since October last year. GBP is being shunted along by speculation as to when the interest rate will be hiked – most likely towards the end of the year. We’ll see an announcement on this very matter this week, with the BoE also releasing notes on how policy makers actually voted; a first for them in letting punters know what’s going on behind the scenes. Aside from that, we’re looking at the release of services PMI, construction and manufacturing data, the last two of which are expected to show improvement.
The euro, by contrast, remains on the back foot, despite things in Greece calming down. With Poland and the Czech Republic deciding not to enter into the Eurozone, confidence in the Commonality was seen to take a dip. The IMF also stated that without the eurozone’s agreement to controversial loan terms, they won’t have any involvement in assisting with Greece’s €86Bn bailout. Germany, however, did show some better-than-expected IFO business sentiment regarding its building, manufacturing and retail sectors. This week, there isn’t much to get excited about as we won’t see any data releases of note. Greece will most likely still serve as decider on how the markets behave.
From the US, a hold on the interest rate was seen as Janet Yellen, Fed Chair, made mention that no improvement in the labour market has been seen to justify the an increase. The market, however, is still betting on the fact this happens in September. Last week we saw core durable goods orders increase 0.8% which is a good improvement from the 0.4% expected. GDP came in at 2.3% - less than the 2.6% expected – but it is a massive improvement on the -0.2% figure previously hit. Data out this week includes non-farm employment numbers on Friday – one to watch out for as an indicator of how the labour market is doing there.
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