British Pound Sterling

Boosting the single currency today was a non-farm payroll report that under-shot expectations, boosting hopes that the US Fed will print more money.

And, the falls in GBP-EUR come despite a good set of domestic UK economic readings.


The rebound for July Industrial Production was well beyond anything that was suggested in the data we've seen so far.

Although the high print partly owes to the effects of the Queen’s Jubilee on the June data, the 3.2 pct increases m/m for manufacturing and 2.9 pct for the headline for July are well beyond that.

However, this strength seems to anticipate the better chance of upside surprise that leading indicators suggested for the August data.

Details show a broad-based recovery, with mining posting +4.9%, water & gas +1.6%, and oil & gas +5.7%.

"Yet, as we didn’t buy into how bad the data looked before, given this is still the holiday impacted period, enthusiasm should be tempered as well as the underlying pace of the economy is not this wonderful either," warns Sean Osborne at TD Securities.

As mentioned the euro is looking supreme today.

"EUR is strong today, having broken to a new multi‐month high and flirting with a 1.27 handle. Yesterday’s ECB bond buying plan has been the catalyst to push EUR above its range. As oppose to laying out the summary of the plan, we instead look at the best way to judge it from a market’s perspective. If the intent was to curtail convertibility risk (or an EMU breakup) it has done so (temporary at least). We have long argued that central bank policy has removed some tail risk, and in so doing crushed market vol and stoked a risk rally. Yesterday’s ECB bond buying program was met with a similar reaction," says Camilla Sutton at Scotiabank.


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