Currency Feed – Wednesday 13th September

Pound gains 1.28% on strong Inflation The Pound has continued to gain ground overnight following yesterday’s higher than expected inflation data with the Pound up 1.28% from yesterdays lows. Inflation registered at a multi-year high, at 2.9%, beating analysts’ predictions and increasing expectations that the Bank of England will start to tighten monetary policy to curb the […]

13th September 2017 | Miles Eakers

Pound gains 1.28% on strong Inflation

The Pound has continued to gain ground overnight following yesterday’s higher than expected inflation data with the Pound up 1.28% from yesterdays lows. Inflation registered at a multi-year high, at 2.9%, beating analysts’ predictions and increasing expectations that the Bank of England will start to tighten monetary policy to curb the inflationary pressure.

UK wage growth data is marked for release at 09:30 today. Expectations are for wages to have grown at a slower pace than inflation. Analysts predict that wages have grown by only 2.3%. As prices continue to rise at a faster pace than wages this hurts consumer spending and the overall economy putting increased pressure on the Bank of England to act.

Eurozone industrial production is marked for release at 10:00 today. Expectations are for industrial production to have risen by 0.1% month on month and 3.4% on an annualised basis. The current focus in Europe remains as to when the ECB announce their plans to start tapering their asset purchases and tightening monetary policy.

The US Dollar was weaker at the start of today’s trading session, as uncertainty surrounding the threat of North Korea persists. North Korea have stated that plans to acquire the H-bomb that can strike US soil, following the UN’s economic sanctions.

US Treasury Secretary Steven Mnuchin stated that, if China doesn’t follow the new UN imposed restrictions, additional sanctions may be imposed from the US on China, raising uncertainty around the Greenback.  In terms of data US producer prices index data is marked for release at 13:30 and stronger than expected 0.3% could give the dollar a boost.

Asian markets were unable to continue the bullish momentum from their US counterparts overnight with European equity markets set to open lower. The S&P had gained 0.3% on Tuesday to a record closing price of 2,496. European equity markets are expected to open mixed with the FTSE set to lose 8 points and the DAX to drop 16 points. Oil was down 0.2% to $54.14 after gaining 0.8% in the previous session while Gold was flat at $1,331.66.

EUR/USD $1.1982 (+$0.0017)

EUR/USD is positing a small gain ahead of the European open, rising to a fresh daily high of $1.1992 in recent trade. The bias surrounding the US Dollar is tilted to the downside this morning  following a broadly positive start to the week for the global reserve currency. Fresh impulses for the Euro meanwhile have been limited with investors looking ahead to Euro Zone industrial production data due this morning. From a technical view, we look for support at yesterday’s low of $1.1924 and the September 6th low at $1.1901. On the upside, Monday’s high at $1.2039 and Friday’s high at $1.2092 are in focus.

GBP/USD $1.3309 (+$0.0027)

GBP/USD extended its recent run higher in Asia overnight, rising to a daily high of $1.3314 which is its best level since September 2016. Sterling continues to derive support from yesterday’s UK CPI beat which has raised the likelihood of a hawkish surprise from the Bank of England tomorrow. The bias surrounding the US Dollar meanwhile is tilted to the downside this morning  following a broadly positive start to the week for the global reserve currency. Ahead, UK labor market indicators at 09:30 BST will be the main focus this morning while U S producer prices follow this afternoon. Above today’s high, we look for resistance at the September 12th (2016) high of $1.3346 and September 6th high at $1.3445. On the downside, Monday’s high at $1.3222 and yesterday’s/Monday’s low at $1.3158 are in focus.

USD/JPY ¥110.06 (-¥0.10)

USD/JPY hit a fresh eight-session high at ¥110.29 in the early exchanges of the Asian trading session. However, the pair succumb to selling pressure as the Dollar softened across the board, pushing the pair to a daily low of ¥109.97 in recent trade. Data released overnight showed Japanese business sentiment strengthening in the third-quarter and this may have also lent some support to the Yen, as would have the latest rhetoric from North Korea. From a technical view, yesterday’s low at ¥109.23 and Monday’s low at ¥108.12 may offer support while on the upside we look for the September 1st high at ¥110.41 and August 31st high at ¥110.66.

GBP/EUR €1.1108 (+€0.0010)

GBP/EUR is little changed ahead of the European open although did extend the daily high to €1.1114 in recent trade, shy of yesterday’s one-month high at €1.1131. Sterling continues to derive support from yesterday’s UK CPI beat which has raised the likelihood of a hawkish surprise from the Bank of England tomorrow. UK labor market indicators follow this morning and could prompt some additional volatility. Fresh impulses for the Euro meanwhile have been limited with investors looking ahead to Euro Zone industrial production data due this morning. Yesterday’s high at €1.1131 forms our first resistance level ahead of the August 3rd high at €1.1203. on the downside, yesterday’s low at €1.1007 and Monday’s low at €1.0953 may offer support.

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