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The tills were ringing in July
A busy day for economic data has started well for sterling with retail sales rising by 0.6% in July in the UK. The rise was due to sunny weather and spending surrounding the England women’s football team winning the European Championship, according to the Office for National Statistics (ONS).
It’s helped to boost the pound and see its continued recovery after the severe losses for GBP/USD on Wednesday. The cause of that – bond market panic – eased a little yesterday, with 30-year gilt interest rates dipping and helping to stabilise the pound.
It’s been a relatively stable week against the euro – itself rocked by the bond markets as government borrowing costs rise across the bloc – but we will shortly get some employment and GDP data for the eurozone that could hold a sting in the tail.
The ONS has had its own problems getting accurate data lately, but this afternoon we’ll get the first Non-Farm Payrolls data from the USA (a highly influential guide to the US economy) since President Trump fired the previous US jobs chief because he didn’t like the numbers. Even under new management a further low number of new jobs in the economy looks likely, and that could damage the dollar, but can the data be trusted?
We have also heard this morning that house prices in the UK rose by 0.3% in August, according to the Halifax. Their head of mortgages pointed out that despite average prices now at an all-time high of £299,331, there are positive signs for first time buyers, for whom: “the numbers increasingly stack up. The typical first-time buyer property now costs £237,577, down -0.6% since May. On a 95% LTV mortgage over 30 years, that could mean monthly repayments of around £1,179 compared to the average UK private rent of £1,343.”
In business news yesterday, the day after the housing minister Angela Rayner (currently fighting for her political career after a tax evasion scandal), was praised by the Prime Minister for “building 1.5 million homes”, UK construction was in fact shown to be in its longest downturn since 2020. Construction PMI showed business activity at its lowest for eight months and optimism among construction professionals at its lowest for nearly three years.
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GBP: Positive movements for sterling
A quiet day on the markets saw sterling barely move against the euro and US dollar yesterday. The pound gained on some commodity-backed currencies, with a third of a cent gain on the Australian dollar and Norwegian krone, and it’s had a bit of a shot in the arm this morning from the retail sales data, but there’s little to excite the markets on the data front until GDP next Friday.
GBP/USD past year
EUR: Stability for euro
The charts were generally green for the single currency yesterday, with the only losses, and those very small, against the pound and US dollar. This afternoon we’ll get final results for eurozone employment and GDP data.
EUR/USD past year
USD: Dollar on the rise
There were modest but clear rises for the US dollar against most major rivals yesterday, such as the Swiss franc and Australian dollar. This afternoon we’ll get Non-Farm Payrolls data, with more low numbers for new US jobs expected by the markets.
USD/GBP past year
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