GBP
Sterling struggled last week, chalking up its worst week since last September, and cracking below 1.20 once more, as UK inflation rose at its fastest pace in more than 4 decades, and worries about anaemic economic growth escalated.
The pound’s fortunes continue to look bleak, especially with political uncertainty remaining elevated as the Tory leadership contest continues, and with another sharp rise in energy bills set to exacerbate the cost-of-living crunch in October.
Looking ahead, this week brings little in the way of important data releases, besides the latest round of ‘flash’ PMI surveys.
EUR
In a similar manner to the GBP, the common currency struggled last week, falling back towards parity once more, as the eurozone economy continues to gallop towards a recession this winter.
This leaves the ECB in a tricky spot, with the window to hike rates rapidly slamming shut, thus weakening the EUR as the Fed maintain their recent hawkish tone.
Looking ahead, this week’s eurozone calendar is also rather quite, besides the aforementioned ‘flash’ PMI reports.
USD
The greenback rallied back close to cycle highs against a basket of peers last week, benefitting after a handful of FOMC officials began to push back on the market’s pricing of an impending pivot to a more dovish policy stance.
These gains were, unsurprisingly, most evident against lower yielders, such as the EUR and the JPY, where the policy divergence will become even more vast should the Fed announce a third straight 75bps hike next month.
This week, the annual Jackson Hole Symposium, starting Thursday, will be the main event, with Fed Chair Powell likely to provide relatively strong guidance as to how hawkish the Committee’s next move may be.
World News
Global markets set to take a hit this morning as The Federal Reserve approach their next meeting with a hawkish tone. Rumours suggest that the Fed may be more aggressive in their rate hikes as they do what it takes to bring inflation back towards their target level of 2%. Chair of the Federal Reserve, Jerome Powell is set to advise that getting inflation down to target is non-negotiable and that the Fed will raise rates as far as it takes and for as long as it takes.
With the Chinese economy hurt over extended Covid lockdowns and property debt, China trimmed its key lending rate in an attempt to revive demand and boost the economy. The People’s bank of China cut its five-year loan prime rate by 15 basis points and lowered its one-year prime rate by 5 basis points.
Data Releases
| Date | Region | Release | Previous | Consensus |
| Tuesday 22nd August | EU | EU Services and Manufacturing PMIs | ||
| Tuesday 22nd August | UK | UK Services and Manufacturing PMIs | ||
| Tuesday 22nd August | US | US Services and Manufacturing PMIs | ||
| Thursday 24th August | US | Prelim GDP q/q | -0.90% | -0.80% |
| Thursday 24th August | US | Jackson Hole Symposium | ||
| Share Index | Prev. Close | Open |
| FTSE100 | 7550.37 | 7550.37 |
| DAX | 13544.52 | 13471.44 |
| CAC40 | 6495.83 | 6448.81 |