Morning all
Broken the back of the week.
GBP
3 straight days of gains, 1.63% against the EUR and 2.9% against the USD.
GBP sensitivity still very much reliant heavily on the inflow of foreign investor capital to sustain its valuation, owing to the UK’s long-standing current account deficit which stands at 5.3% of GDP. However if foreign investors are not buying UK equities and bonds then the pound is at risk of declining again, exposing it to negative media attention and thus the decline could begin again. Therefore the near-term outlook for GBP is relying upon how long the current September relief rally can continue, is it permanent or will it be inevitably be sold into? We personally believe that the GBP comeback is built on thin grounds and promises from the Conservative party, the latter not being a great foundation. If you’re a GBP seller, do a percentage here. We are 8% up from last week…
USD
Chinese on holiday at present so flows are low across the pond with lots of media attention now on Elon Musk purchasing Twitter – looking forward to seeing Donald Trump back online!
Inflation is still rife in the US, however we really need to take a leaf out of their book. They are managing it exceptionally well by hiking rates accordingly and managing the media scare mongering affectively. However all eyes on the ISM services data out today. What’s this? It shows the business conditions in the non-manufacturing sector. Expecting a good number, USD already strengthening this morning.
EUR
Staying on topic, more data – Retail Sales figures due tomorrow. This will set the cat amongst the pigeons, a really good figure and we could see GBPEUR pull below GBPUSD for the first time in a while. Or conversely a rubbish figure we could see GBPEUR back in the late teens – relief.
Have a good morning all