Daily Market Brief – 4th August 2015

Hi, Your Daily Currency Note

Quote of the day: “The secret of business is to know something that nobody else knows”

August 4th: Highlights

  • GBP/EUR unchanged at 1.42281
  • All eyes on Thursday interest rate decision
  • Greece banking stocks plunge again
  • GBP/AUD impacted by RBA rate statement
  • GBP/CAD strongest in 10 years

Sterling Comment

GBP/EUR is currently trading at 1.42281, practically unchanged since Monday’s close. The key event for this currency pair is going to be Thursday’s BoE combined interest rate decision and Quarterly Inflation Report. A hawkish set of communications could push the pair back up to 1.44 levels. For this to happen, we will need a positive message from Governer Carney. Keep an eye out for Services PMI on Wednesday too, as surprising figures either way could see some volatility in Sterling exchange rates.

“It will be the first eventful BoE rate decision for a very long while. Starting with Thursday’s meeting, the BoE will release the Minutes from its monthly MPC meeting alongside the rate decision. Because August is also a Quarterly Inflation Report (QIR) month, the QIR will be released at that same moment as well. The press conference that accompanies QIRs will take place 45 minutes after the policy announcement and QIR release,” says Greg Anderson of BMO Capital

GBP/USD staged a fightback yesterday after data showed that manufacturing activity in the UK expanded at a faster rate than expected last month, only to fall to 1.5567 on the US market open. The pair is now trading in the region of 1.5617.

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Greece’s banking stocks took a nosedive for the second day in a row. The rout took 8 billion Euros off the market on Monday. The banking index .FTATBNK, was down 27.1 percent, managing to keep above the 30% daily loss limit at which trading halts.

Global Comment

The EUR/USD pair ignored downbeat US ISM manufacturing data released yesterday as markets preferred to hold the US currency ahead of an action packed economic calendar this week. Keep an eye out for US factory orders data due at around 3pm BST. The pair is trading at 1.0973.

Down Under we were presented with the RBA’s rate statement and the RBA interest rate decision. As anticipated, interest rates remained unchanged at 2%. The GBP/AUD pair is trading in the region of 2.1098, it saw over 1.45% negative drop following the data release.

GBP/CAD surged to its strongest levels in ten years off the back of falling oil prices and the ever growing prospect of a National Election. The Loonie was also not helped by a surprise contraction in GDP growth in May. The pair is currently trading around 2.0499

Have a great day!

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Paul Plewman
Director of Sales & Operations
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