UK returns from bank holiday to minimal change
Most of the UK was closed for a public holiday yesterday. As Britain accounts for 38% of the global foreign exchange market turnover, a day like that can either be as flat as the proverbial pancake or extremely volatile. On this occasion, sterling lost a little ground but traders have been quick to take advantage of that weak sterling level and the pound has bounced back this morning. It helped that there was very little tier-one data released on Monday. As far as Tuesday is concerned and for the rest of the week the UK data diary is very light. So sterling is likely to take its cues from events across the channel and across the North Atlantic. We’ve already had Swedish economic growth data this morning. More of that below. The GBP/USD rate is bouncing half a cent above and below USD 1.26 and the GBP/EUR rate is up 1/3 of a cent from Monday’s lows. That pair is up to EUR 1.1670 this morning.
Swedish GDP beats expectations
Swedish GDP data showed a 1% drop in economic activity in the year to June. That matched the previous quarter but was significantly better than the market forecast of minus 2.4%. The GBP/SEK rate peaked at SEK 13.94 on Sunday but dived to SEK 13.82 on Monday before the pound found some buyers and this pair levelled off at this morning’s SEK 13.83.
Australian retail sales show healthy bounce
Australian consumers were much more active in July. The retail sales data shows a 0.5% increase in activity after a 0.8% decline the previous month. That was much better than expectations and we can see that in the value of the Australian dollar, which has strengthened on the back of this news. The GBP/AUD rate, which had been flirting with AUD 2.00 just a week ago, is down to AUD 1.9580 this morning. At the time of writing, we are awaiting a speech from Michele Bullock, the Assistant Governor of the Reserve Bank of Australia. Maybe she will be able to cast some light on the likely path of Australian interest rates.