Sterling slips but bounces on International Monetary Fund ‘forecast’
|Today's Highlights
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Sterling slips but bounces on International Monetary Fund 'forecast'
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German business confidence at record levels
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USD stable ahead of Federal Reserve meeting
Current Market Overview
For some strange reason, people have taken heed of the International Monetary Fund’s (IMF) downgrading of the UK growth forecast. This is the IMF that declared Britain would slump after the Brexit vote. That was wrong and the IMF has a pretty woeful record of forecasting, so after slipping in early Monday trade, the Pound bounced back a little. The lack of UK data yesterday left the Pound wandering, but this morning’s Confederation of British Industry (CBI) Industrial Trends survey is expected to reflect a small scale slowdown in activity and that may weaken the Pound.
We have already seen the German IFO Business Indices this morning and they offered the highest levels on record. The monthly Confidence Index was at the second record level in a row and the Euro strengthened on the news. It pushed the Pound down below €1.12 and pushed the Euro – US Dollar rate up to $1.1650.
The Sterling – US Dollar rate sits cautiously above the $1.30 level but only just. This afternoon’s US Consumer Confidence Index is forecast to have fallen somewhat and that could allow the Pound and Euro to extend gains against the US currency. However, tomorrow’s Federal Reserve interest rate and Quantitative Easing (QE) decisions are the greater focus, so traders are likely to keep their powder dry for now.
Overnight tonight we’ll get the New Zealand Trade Balance figures. There is a good chance both imports and exports will have fallen and the trade surplus is likely to have narrowed. A little weakness in the New Zealand Dollar would follow if these forecasts are correct and that may be just the opportunity you are waiting for if you are a NZD buyer.
Other than these meagre portions, there isn’t much to add for today. It is Matt LeBlanc’s birthday, so Happy Birthday to him; and it is Revolution Day in Egypt, so Happy Revolution to you.
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