Forex Weekly Round Up 3 August 2015 – 7 August 2015
Unemployment in the eurozone is neither improving nor getting worse, despite hopes that the latest figures would show a further drop in the jobless rate. The unemployment rate stayed at 11.1% in June from the same level the previous month. Economists had been expecting a small decrease in the rate to 11%. The lowest unemployment rate in the bloc in June was recorded in Germany (4.7%) and the Czech Republic is also faring well (4.9%).
The only piece of data for the pound on Monday was the release of the UK manufacturing PMI. UK manufacturing growth picked up in July, a survey has suggested, after a 26-month low in June.
The UK is set to be the fastest growing economy in the G7 for the second year running. Growth is expected to reach 2.5% this year according to the national institute of economic and social research.
We saw The Bank of England implement its “super Thursday” and release several key pieces of fundamental data in a shotgun approach at 12 noon. Most notably, one of its top policymakers backed an immediate move to hike interest rates as the BoE pointed to a possible increase in interest rates early next year. The bank also forecast a slow pick-up in inflation from zero thanks to a strong pound, expecting inflation to be back on target in two years’ time.
The Pound fell sharply across the board as most economists expected two or even three members of the Monetary Policy Committee to vote for a rate hike. The surprise 8-1 result prompted markets to push out their bets on a first rate hike; with only Ian McCafferty voted against the majority.
On Tuesday evening the dollar rose to its highest level in over three months after hawkish comments from a voting member of the US Federal Reserve’s policy setting committee. Atlanta Fed president Dennis Lockhart said there would need to be a significant deterioration in economic activity to hold the Fed back from raising rates in September.
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