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August 19, 2013

Currencies Direct Weekly Market Analysis – Sterling maintains new found strength

Filed under: Currency Information — Lucy @ 11:52 am

Sterling maintains new found strength

August 18th, 2013

Welcome to your weekly market analysis email from Currencies Direct where you can stay one step ahead of your friends on the latest news and reviews of the financial markets. Our aim is to provide you with an easily digestible weekly update of how the financial market is performing using the expertise of your dealers who make it their sole aim to keep on top of the market movements.

GBP

Sterling has managed to retain its new found strength post the MPC meeting and BOE governor Mark Carney announcing a clear strategy to hold interest rates until unemployment gets to a level under the 7% barrier. However, markets have failed to be convinced by those signals as they expect a rate rise earlier than the Bank’s forecast of late 2016, implying that rates would have to increase sooner based on the consistently positive data that has come out this month. A slight pullback seems to be likely next week from current levels as the pound seems to have topped out on its recent run coupled with the lack of economic data to back it up as we move into next week.

USD

The data flow from the US continues to point to September tapering by the Federal Reserve, after retail sales and jobless claims show an economy grinding out a recovery and crucially not creating very much inflation in doing so. The Fed’s dual mandate intact, gradual withdrawal of the asset purchase scheme will probably be met with howls of derision by risk markets and may be Dollar positive in over the next quarter as stimulus is gradually taken away in Q4. Next week should a quiet one for the Dollar unless taper talk sparks major sell-off in risk assets. The annual Jackson Hole meeting of central bankers has been the platform the Fed used to launch successive QE programs; any announcements emanating from the conference are likely to impact the Dollar over the coming week.

EUR

It has been a good data week for the Eurozone too with confirmation that it has officially exited a recession. Germany and France were the main drivers of Eurozone growth in the second quarter with the periphery still struggling. Inflation in the Eurozone remained unchanged at 1.6% and the Eurozone recorder a trade surplus of 16.9 billion in June. The better numbers failed to follow through into Euro strength until a rally at the end of the week. Next week we have Euro PMI’s in both manufacturing and services and consumer confidence to look out for.

The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.

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