Data coming out of the UK economy has been largely positive, only a small hiccup has caused a shock for investors. However, the GBP was unmoved by this piece of data. The small hiccup was manufacturing production (Actual: -1.3%, Expected: 0.4%, Previous: 0.3%, 08/07/2014) which was below market expectations. However, investors understand this is a small hiccup and they remain optimistic over the current recovery. We still expect the BoE to be the first central bank among the ECB and Fed to raise interest rates. This week's data regarding inflation will provide us with more information of when the BoE may raise interest rates. If CPI y/y (Expected: 1.6%, Previous: 1.5%, 15/07/2014) falls below expectations then we are likely to see a delay in the interest rate hike.
Meanwhile on the other side of the English Channel, the Euro Bloc is just about staying afloat. The major concern that the ECB (European Central Bank) has is the strong Euro. A strong Euro is hurting the export market and is probably the cause of low inflation (imports become cheaper). Inflation has also been a major concern with the ECB. The changes in monetary policy made in June still need some time to show through in the data. Although, if no results show from these changes, then we could see the ECB draw nearer to QE (Quantitative easing). QE has been used by the BoE and Fed with great results. QE will help address the concerns that the ECB is facing, ensuring a weaker currency and ensuring they reach their target inflation rate of 2%.
Meanwhile on the other side of the English Channel, the Euro Bloc is just about staying afloat. The major concern that the ECB (European Central Bank) has is the strong Euro. A strong Euro is hurting the export market and is probably the cause of low inflation (imports become cheaper). Inflation has also been a major concern with the ECB. The changes in monetary policy made in June still need some time to show through in the data. Although, if no results show from these changes, then we could see the ECB draw nearer to QE (Quantitative easing). QE has been used by the BoE and Fed with great results. QE will help address the concerns that the ECB is facing, ensuring a weaker currency and ensuring they reach their target inflation rate of 2%.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.