Daily Update – 14th August 2019
Sterling held near a 2-1/2 year low against dollar on Tuesday, as concerns about a no-deal Brexit dominated sentiment despite data showing wage growth in the United Kingdom rose to an 11-year high. Britain's labour market showed unexpected strength in the second quarter with total earnings growth, including bonuses, rising by an annual 3.7% in the three months to June, the highest rate since June 2008. Strong labour data could put pressure on the Bank of England to hold interest rates. Presently, money markets give a 68% chance of a one quarter point rate cut by end-December. Earlier in the day, Germany released the August ZEW survey, which showed that mood among European investors continued deteriorating. US President Trump later said that the decision was taken to prevent an impact on the Christmas shopping season. Anyway, the headline was enough to take Wall Street out of the red for the week, with the three major US indexes posting robust gains. This Wednesday, the UK will release July inflation data, The Consumer Price Index, Germany will release the preliminary estimate of Q2 GDP, foreseen at -0.1% from a previous 0.4%. The EU will also publish the preliminary estimate of growth in the second quarter, expected at 0.2%, matching Q1 reading. The US macroeconomic calendar will only offer minor data, irrelevant in terms of price action.Yesterday's Focus
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