United States Dollar: Sterling received a temporary boost higher against the US dollar yesterday as better than expected UK unemployment figures combined with a set of Bank of England policy meeting minutes which made no reference to the possibility of an interest rate cut saw investors buying the British currency. Following the resilient labour market data cable traded to a high of 1.5700 from a session low of 1.5658 but gains for the pair were capped as UK policymakers were shown to have discussed the implementation of further QE despite an injection of £50 billion the month previous. The USD benefitted from some better than expected US economic releases yesterday, in particular July's US industrial production number came in above market expectations. US 10-year treasury yields trading to 1.81% and rising above key technical levels was also cited as factor behind the stronger greenback. UK data will continue to attract the markets attention today as we await July retail sales numbers and the unseasonable weather that we saw last month might mean we see a fairly grim number, although as we've seen previously there is the possibility for upside surprise in this release. Chart resistance remains strong at the pairs 200-day moving average around 1.5719 and on the downside some buyers will likely emerge at 1.5625 and 1.5600. GBP/USD opens this morning at 1.5644.
We expect a range today in the GBP/USD rate of 1.5620 to 1.5720
Euro: Sterling made good gains against the euro on Wednesday, aided by some impressive UK jobs data which showed that 210,000 jobs were created in the three months to the end of June. The Bank of England minutes from the central banks August meeting were also cited as a factor behind the spike higher in the GBP/EUR cross as it was revealed that the MPC didnt discuss a cut in the Bank rate, although there was discussion of another increase in the banks gilt-buying program. GBP/EUR traded to 1.2777 from 1.2687 prior to the better than expected jobs numbers, capitalising on a lack of economic data points from Europe and relatively illiquid market conditions on account of the European bank holiday. Data from Europe remains light today with Eurozone inflation numbers the only real release of note, with the market watching for headlines out of German Chancellor Merkel's visit to Canada where she is likely to face questions regarding the on-going situation in Peripheral Europe. GBP/EUR opens this morning at 1.2750.
We expect a range today in the GBP/EUR rate of 1.2700 to 1.2800
Aussie and Kiwi Dollars: The AUD and NZD were quite well supported yesterday, aided by rising commodity prices and comments from Chinas Premier Wen that seem to hint at the possibility of further easing measures to help the Chinese economy. AUD/USD traded to a high of 1.0514 from European starting levels at 1.0455 and NZD/USD hit a high of 0.8074 from a start around 0.8040. Despite the impressive UK jobs numbers and less dovish than expected Bank of England minutes GBP/AUD fell from its morning highs at 1.4987 to a low of 1.4913 and GBP/NZD was similar, falling from 1.9490 to 1.9416 during early afternoon trading with both of the GBP/antipodean crosses dragged lower by strong selling in the EUR/AUD and EUR/NZD pairs. The overnight session was pretty quiet with no significant moves in the higher yielding currencies and range bound conditions are likely to persist today. GBP/AUD and GBP/NZD open this morning at 1.4931 and 1.9403 respectively.
We expect a range today in the GBP/AUD rate of 1.4870 to 1.5000
We expect a range today in the GBP/NZD rate of 1.9360 to 1.9500
AUD: No data due
EUR: Eurozone CPI
GBP: Retail Sales
USD: Housing Starts, Building Permits, Philadelphia Fed Index, Initial Jobless Claims
If you want instant updates on movements in the FX market and fast access to the UKForex daily commentary, follow us on twitter at http://twitter.com/ukforex or @ukforex