Sterling hits a new low against the Dollar [Video]

Halo Financial Team Halo Financial

Today's Highlights

Sterling hits a new low against the Dollar
Theresa May warns Bank of England (BoE) not to loosen monetary policy further

FX Market Overview

The Pound struggled again yesterday across the board. The UK service sector Purchasing Managers' Index (PMI) didn't help, coming in at 52.6, which was better than the 52.1 forecast, but still worse than the previous level of 52.9. As a result, Sterling plummeted to a five-year low versus the Euro to 1.1300 and GBP/USD dropped to the worst rate since 1984. The Pound weakened to such an extent that the UK has now dropped a place on the list of the world's largest economies, into sixth place, behind France.

French, German and Spanish PMI figures all came out worse than forecast and only Germany improved. There was also little mention of the Deutsche bank. Theresa May, however, managed to provide some relief for the Pound during her speech to the Conservative Party Conference yesterday. She produced a strongly-worded attack on loose monetary policy, claiming that "people with assets have got richer, while people without have not". This has been seen as a bold warning to the Bank of England (BoE) not to loosen monetary policy further. Even though the BoE operates independently from the Government, markets are nonetheless viewing May's words as having complicated any plans for further easing.

In the US, ADP Non-farm Employment data came in lower than estimates at 154k for September, dampening optimism over the health of the labor market. ISM Non-Manufacturing came out much better than expected, at 57.1 from previous 51.4 to further damage GBPUSD.

Today is very light for economic data. We've had German Factory Orders out already this morning – better than forecast at 1%. Later, EU Retail PMI, followed by an ECB Monetary Policy Meeting and US Unemployment Claims data in the afternoon.

Commentary from the Halo Financial Team. Need a trusted FX broker? Register today for more insights and strategies.

Author

Halo Financial Team

Halo Financial

Currency specialists Halo Financial provide regular economic updates to keep you informed of the main factors affecting the foreign exchange market.

GBP/USD loses momentum, flirts with 1.3200

GBP/USD is struggling to maintain its positive bias on Thursday, retreating toward the 1.3200 region in response to the pick in the buying interest around the Greenback. That said, Cable remains under scrutiny as cautious market sentiment keeps investors focused on the US-Iran conflict and political effervescence in the UK.

EUR/USD trims gains, challenges 1.1400

EUR/USD now gives away part of its earlier advance, receding toward the 1.1400 contention zone on Thursday. Meanwhile, the pair’s recovery comes amid extra losses in the US Dollar, at the time when while investors continue to monitor developments in the Middle East and sentiment surrounding global technology stocks.

Gold remains bid and close to $4,100

Gold accelerates its recovery and approaches the key $4,000 mark per troy ounce at the end of the week, adding to Thursday’s advance. However, expectations for a hawkish Fed remain steady and keep the yellow metal’s potential upside contained.

Crypto Today: Bitcoin at $60,000, Ethereum at $1,500, and XRP at $1 face a make-or-break test

Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are trading in the red on Friday after three consecutive days of losses, testing their respective make-or-break support levels.

Week ahead – NFP report to challenge Dollar strength and the hawkish Fed

Dollar strength dominates markets, as the hawkish Fed overshadows geopolitics and lower oil prices. NFP week could drive September Fed hike expectations and boost market volatility. The euro lacks fresh bullish catalysts, all eyes on the preliminary inflation report and the ECB Forum.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.