The British Pound may not see a lasting response to July’s manufacturing PMI report as traders withhold directional conviction ahead of this week’s BOE rate decision.
Talking Points:
British Pound Unlikely to Find Lasting Follow-Through in July PMI Figures
US Dollar Looks to PCE, ISM Data to Inform Fed Interest Rate Hike Outlook
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July’s UK Manufacturing PMI report headlines the economic calendar in European hours. Expectations call for the index to edge narrowly higher to 51.5 from 51.4 recorded in the prior month, reflecting a slight acceleration in the pace of factory-sector activity growth. The outcome may not inspire follow-through from the British Pound however as traders withhold directional conviction until after this week’s much-anticipated Bank of England policy announcement passes.
Later in the day, the spotlight shifts to US economic data. The ISM Manufacturing gauge is expected to print at 53.5 in July, unchanged from the prior month. Meanwhile, the year-on-year Core PCE inflation gauge – the Fed’s preferred price growth measure – is seen holding at 1.2 percent for a second consecutive month.
The latter may prove to command particular attention as traders consider the implications of persistently sluggish inflation for the prospect of a September Fed rate hike. Indeed, the US Dollar dipped alongside front-end bond yields on Friday as disappointing second-quarter wage inflation data crossed the wires. The Employment Cost index gained just 0.2 percent, the least in at least 18 years.
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