Newsletter – 17th July 2017

Morning Bulletin


  • Sterling’s strong end to last week continued on Friday as it performed impressively against the euro and US dollar.
  • The strength was due, in part, to Bank of England’s McCafferty suggesting that the Bank should consider winding down its quantitative easing programme. The MPC member also asserted that he would be voting for higher borrowing costs at then next BoE meeting.
  • Sterling rallied to push back above the 1.14 level against the euro. GBP/EUR opened at 1.1347 before reaching a three-week high of 1.1433 before closing at 1.1415, representing a gain of 0.6% on the day.
  • GBP/USD reached its best levels since September 2016 as it convincingly breached the 1.30 level that has been capping the pair for the last few months. Cable opened the day at 1.2937 and closed very near the highs of the day at 1.3101.
  • Commentators are also claiming that the UK’s seemingly softer stance on its financial obligations after Brexit boosted the pound as it it seen as being positive for future Brexit discussions.
  • This move was the result of not only sterling strength but of disappointing inflation and retail sales data from the US. CPI m/m and Core CPI m/m both missed expectations at 0.0% vs 0.1% and 0.1% vs 0.2%, respectively. Retail sales m/m and core retail sales m/m also missed at -0.2% vs 0.1% and -0.2% vs 0.2% expected, respectively.
  • We had economic data released from China overnight with GDP q/q coming in as expected, industrial production y/y beating estimates at 7.6% vs 6.5% expected and fixed asset investment ytd/y matching expecations at 8.6%.
  • Sterling strength on Friday caused GBP/NZD to above 1.78 and we remain above that level at the time of writing.
  • We have a quiet day ahead in terms of economic data with the only pieces of note being final CPI from Europe at 10am and empire state manufacturing index from the US at 1.30pm.
  • Later this evening we see CPI q/q from New Zealand at 11:45 UK time.
Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1425 +0.09
GBP/USD 1.3081 -0.16
EUR/USD 1.1450 -0.12
AUD/USD 0.7811 -0.17


ime (GMT) Region Data Release Forecast Previous
10:00 EUR Final CPI y/y 1.3% 1.3%
13:30 CAD Foreign Securities Purchases 9.78B 10.60B
13:30 USD Empire State Manufacturing Index 15.2 19.8
23:45 NZD CPI q/q 0.2% 1.0%