GBP continues to slip against USD and EUR

Good morning

Two days back from holiday and I’ve managed to do my back in.  L3 apparently, which I can assure doesn’t sound anywhere near as bad as it is.  I had been doing a bit of swimming g when I was away and decided I’d join the local gym with a swimming pool to finally get fitter and healthier.  I did my back pretty much reaching for the phone to sign up.  I told you exercise can’t be good for you.

US dollar strength was the key theme yesterday, with GBP and EUR trading lower against USD, with GBPUSD reaching 1.3320 and EURUSD 1.1430, both the lowest for nearly two months.  I’m not sure if it was Trump’s speech at the UN General Assembly had any impact, he certainly talked the US up immensely although some of his claims would have kept the fact-checkers busy.  Trump also met Zelensky, while US officials met with Iranian delegates in the hope of securing a peace deal after Trump seemed to give Iran the choice of greatness or obliteration.  Oil prices are a touch lower than they were this time yesterday helped in part by reports Sausi Arabia is preparing to reopen the East-West pipeline.

Trump met PM Burnham after his speech, I did watch their press conference where Trump talked of the massive potential for the UK and Burnham did look a bit smug when Trump called him Andy and said the US/UK relationship was certainly better than it was with Starmer.  Not saying much really.  Burnham did mention the one plane UK had offered to send to Saudi Arabia while Trump remains weirdly on the side-lines in that battle against the Houthis. 

GBP has slipped a little further against USD and EUR this morning, now 1.3305 and 1.1650.  The Times has said UK needs to cut welfare or end up possibly needing external financial support in the same way Greece did a while back.  In the crosses GBP is 1.8775, 2.3335, 1.8745 and 210.00 against AUD, NZD, CAD and JPY.  AUD has seen a bit of weakness after disappointing PMI numbers overnight.  UK isn’t the only country that needs to cut borrowing, the IMF has warned that governments globally need to take urgent fiscal action to reduce or at least contain existing debt levels.

Mixed views from central bank officials, with most still looking for more rate rises.  We’ve already seen rate rises from ECB and Fed to counter inflation driven largely by higher energy prices.  So far BoE have avoided such action, something I have to say I am pleased with.  Raising rates will not create more oil, nor will it reduce demand.  For now the odds of a UK rate rise seems to depend largely on where oil prices are, the higher they go the more chance there is that BoE will have to step in at some point.

EU, UK and US PMIs all on the calendar today, while Aussie employment will be the main focus overnight.

Have a great day…

-  09.00 EU manufacturing, services PMIs

-  09.30 UK S&P manufacturing, services PMIs

-  14.45 US S&P manufacturing, services PMIs

-  15.05 Feds Barr speaks

-  17.00 ECBs Cipollone speaks

-  17.30 ECBs Lane speaks

-  02.30 AUS employment