USD sees strengthening

British factory orders slowed more than expected in July and growth expectations also eased, a latest sign that the pace of recovery in manufacturing has lost a bit of steam, the Confederation of British Industry said yesterday. The CBI survey's monthly total order book balance slowed to +2 this month from +11 in June and was below expectations for a balance of +8. UK property sales in June - hit their joint highest monthly total since the financial crisis began, figures show, but sales among young adults are low. There were 109,580 sales in June, the same as in November last year, and the highest since the end of 2007, HM Revenue and Customs' data shows.

The two tiers of data released yesterday did not affect sterling exchange rates due to them not (fundamental) being considered as high impact and that can be witnessed in GBPUSD, as the pair, only moved in a 40pip range peaking to a daily high of 1.7083.

On Friday we will have GDP figures - depending on how you look at it - either the most symbolically important or the most pointless economic event of recent times. Namely, official confirmation that the depression caused by the mother of all banking and financial crises is finally over. UK output or GDP has finally exceeded its pre-recession peak. On the official government stats, GDP fell by 7.2% between its peak in the first quarter of 2008 and its trough in the second quarter of 2009.

Since then recovery has been unusually - some would say slow, and national output in the first three months of this year was still 0.6% below that peak. However, the recovery has been picking up considerable momentum over the past year and the UK is now the fastest growing of the world’s leading economies.

Later this morning, we have the MPC interest rate decision so it will be interesting to see if the committee are in favour of hikes our continuing with the “unchanged” strategy for the medium to short term.

It was a another summer Tuesday of below-average FX volumes and directionless price action as there was nothing to report from an economic perspective out of the struggling economy.

GBP/EUR is trying trade around resistance levels of 1.27 when yesterday it closed the London session at 1.2662 so could Fridays GDP figures (if exceeded) break the climb towards 1.30?

Lunchtime today we have consumer confidence expected to read a similar level as last month of -7.5. A high reading is seen as positive (or bullish) for the EUR, while a low reading is seen as negative (or bearish).

The US Dollar was broadly stronger yesterday against its major peers in what is otherwise a quiet US trading session. The strength in the greenback may be due to firming Fed bets, and interest rate speculation, but all else equal, there doesn’t seem to be a strong catalyst explaining the strength in the US Dollar.

Yesterday the US economic calendar was complete with several data figures, but it was June’s US CPI data that headlined economic risk. The benchmark year-on-year inflation rate registered at 2.1 percent, unchanged from prior month. The core rate (excludes Food and Energy) missed analysts’ expectations of 2.0 percent, and reported at 1.9 percent. The recent mix of US Data has been unable to inspire relief in the Euro, until yesterday! The single-currency bloc has been under pressure since the market opened up this week, and has been losing ground since ECB Draghi verbally intervened on at a press conference on May 8th, 2014. EURUSD broke the 1.35 level and closed the European session at 1.3466.

On Friday, keep an eye out for Durable Goods for June as it is expected to climb from last month’s figures which should, in theory strengthen the greenback.