ISM Services Data In The Afternoon.

GBP – GBP faced challenges as the Bank of England delivered a broadly expected 25-basis point rate cut at its August meeting held on Thursday. Additionally, BoE Governor Andrew Bailey noted that the increase in the minimum wage has not been detrimental from their viewpoint. He mentioned that the overall inflation trajectory, including upside risks, is now closer to the 2% target. Governor Andrew Bailey also said the BoE’s Monetary Policy Committee would move cautiously going forward. “We need to make sure inflation stays low, and be careful not to cut interest rates too quickly or by too much,” he said at the post-policy meeting press conference. The pound continued to weaken against the euro, touching an eight-week low

USD – US Nonfarm Payrolls increased by 114K in July from the previous month of 179K. This figure came in weaker than the expectation of 175K, data showed on Friday. Meanwhile, the US Unemployment Rate rose to the highest level since November 2021, coming in at 4.3% in July from 4.1% in June. Additionally, the US ISM Manufacturing PMI tumbled to an eight-month low of 46.8 in July. The USD dropped to a four-month low on Friday after a weaker-than-expected employment report for July raised expectations that the Federal Reserve will cut interest rates by 50 basis points in September as the economy sours. Markets are now pricing in a 71% probability that the Fed will cut rates by 50 basis points in September, up from 31% before the data was released and from 22% on Thursday. ISM Services data will be the key data piece for Monday, with figures printed this afternoon.

EUR – The EUR came under pressure on Monday due to its strong negative correlation with a rising USD and caution from EUR investors ahead of some high-impact Eurozone data. The common currency then rose on Tuesday after Eurozone GDP beat forecasts for the second quarter, printing at 0.3% rather than the expected 0.2%. However, EUR’s upside was limited. An unexpected rise in Eurozone inflation further lifted EUR on Wednesday. The shock uptick in price pressures was seen as dampening the odds of another interest rate cut from the ECB next month. A surprise increase in Eurozone unemployment put some pressure on the Euro towards the end of the week, however EUR was still able to make strong gains against the tumbling Pound.

Economic Calendar