Spare a Thought for the Pound – GDP Numbers to Influence

It may be a quiet day on the economic calendar, with key stats out of the Eurozone limited to this morning’s 2^nd estimate, 2^nd quarter GDP numbers out of Spain, which were in line with 1^st estimate numbers providing some support for the EUR, though the markets are certainly less interested in Spain’s GDP numbers and more interested in what surprises there may be from the Jackson Hole gathering which kicks off today.

There’s been plenty of focus on the EUR and the Dollar of late, as uncertainty reigns over how the respective central banks will move through the final quarter of the year. It’s provided EUR strength, whilst the Dollar has continued to face pressure, not only from negative sentiment towards money policy, but also as a result of the U.S administration, with Trump’s willingness to shut down the government to build the infamous wall catching many by surprise on Wednesday, with such Draconian comments rightly sending U.S equities into a spin alongside the Dollar.

Trump may be looking to gain some control, having failed to deliver on any of his growth policies to date, with the Healthcare shambles all there has really been to consider, other than the weaker Dollar, for the administration to be able to lay claim on.

As we continue to point out, the Dollar remains particularly sensitive to noise from the Oval Office, though one does begin to wonder at what point the markets will begin to discount Trump’s huffing and puffing, as he has yet to blow down any houses…

With stats out of the U.S this afternoon limited to the weekly jobless claims figures and July existing home sales, the degree of focus on Jackson Hole will likely limit any upside in the Dollar, should the stats be on the positive side, with yesterday’s August service PMI numbers having been overshadowed by Trump and a manufacturing sector that continues to pour out mixed signals.

We will have to wait until tomorrow for the key speeches from Jackson Hole, which will likely leave both the EUR and the Dollar in limbo, though we will expect the Dollar to attempt to recover Wednesday’s losses, not because of sentiment towards the respective economies, but because Trump’s words do need to be taken with a pinch of salt on occasion.

At the time of the report, the Dollar Spot Index was up 0.21% at 93.342, with the EUR down 0.12% at $1.17931.

Across the Pond, things have certainly become more interesting, with the Pound having hit sub-$1.28 levels of late, with a string of weak stats and an increase in focus on Brexit negotiations the negatives.

Macroeconomic data out of the UK this morning includes 2^nd estimate, 2^nd quarter GDP numbers, which are forecasted to be in line with 1^st estimate figures. In line with or better will provide some much needed support as the Pound recaptures $1.28 levels this morning, though how successful the Britain’s negotiators are at getting trade pushed up the priority list will be key for the Pound over the medium-term.

The Pound certainly looks attractive, but there will need to be positive shift in economic indicators for markets to show less concern over the economic outlook and perhaps become a little more positive on Britain’s ability to negotiate Britain out of the EU on relatively favourable terms. After all, from a trade perspective, the fact remains that Britain remains a key trading partner with EU member states and few will likely want to give the relationship up any time soon or ever for that matter…

At the time of the report, the Pound was up 0.06% at $1.28075, with further gains likely should disappointment be avoided in this morning’s data.