26/07/2024
Written by: Ian Morley
Summary:
The ISM services data released in the afternoon indicated a continued growth in the sector, albeit below expectations, with concerns emerging over job cuts. This led to a weakening of the USD, pushing GBPUSD to a one-month high and EURUSD back to levels seen on February 22nd. Earlier in the day, EU PMIs were revised upwards while UK PMIs were revised downwards for February.
Speeches:
Market Insight:
Today, we anticipate the release of the ADP job report, expected to show an increase of 150,000 jobs in February, along with the JOLTS job openings. Yesterday’s ISM services employment data hinted at potential weakness in the US job market, contributing to USD depreciation. Further weakness in today’s numbers could precede Powell’s congressional testimony and Friday’s job report.
The UK budget, set to be unveiled at 12:30 pm, may prioritize a reduction in National Insurance over income tax cuts, potentially impacting GBP performance. Any inflationary pressures resulting from the budget could delay BoE rate cuts, bolstering GBP. The Bank of Canada’s interest rate decision, expected to maintain rates at 5%, might address future rate cuts, influencing CAD weakness.
JPY has gained ground following MUFG Bank’s suggestion to end negative interest rates sooner. For GBPUSD clients purchasing USD, targeting the 2024 highs amidst budget-induced volatility and US job data fluctuations could be advantageous.
Analysis:
Demand driving GBPUSD higher in response to weaker US job figures suggests potential for further upward movement, compounded by expectations of inflationary pressures from the UK Spring Budget, hinting at a retest of 2024 highs.