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Pound Response to PMI Data Likely Limited as BOE Looms Ahead

Pound Response to PMI Data Likely Limited as BOE Looms Ahead

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • British Pound Unlikely to Find Lasting Follow-Through in July PMI Figures
  • US Dollar Looks to PCE, ISM Data to Inform Fed Interest Rate Hike Outlook
  • See Economic Releases Directly on Your Charts with the DailyFX News App

July’s UK Manufacturing PMI report headlines the economic calendar in European hours. Expectations call for the index to edge narrowly higher to 51.5 from 51.4 recorded in the prior month, reflecting a slight acceleration in the pace of factory-sector activity growth. The outcome may not inspire follow-through from the British Pound however as traders withhold directional conviction until after this week’s much-anticipated Bank of England policy announcement passes.

Later in the day, the spotlight shifts to US economic data. The ISM Manufacturing gauge is expected to print at 53.5 in July, unchanged from the prior month. Meanwhile, the year-on-year Core PCE inflation gauge – the Fed’s preferred price growth measure – is seen holding at 1.2 percent for a second consecutive month.

The latter may prove to command particular attention as traders consider the implications of persistently sluggish inflation for the prospect of a September Fed rate hike. Indeed, the US Dollar dipped alongside front-end bond yields on Friday as disappointing second-quarter wage inflation data crossed the wires. The Employment Cost index gained just 0.2 percent, the least in at least 18 years.

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Asia Session

GMTCCYEVENTACTEXPPREV
23:30AUDAiG Perf of Mfg Index (JUL)50.4-44.2
00:00AUDCoreLogic RP Data House Px MoM (JUL)2.8%-2.1%
00:30AUDTD Securities Inflation MoM (JUL)0.2%-0.1%
00:30AUDTD Securities Inflation YoY (JUL)1.6%-1.5%
01:00AUDHIA New Home Sales MoM (JUN)0.5%--2.3%
01:30AUDANZ Job Advertisements MoM (JUL)-0.4%-1.2%
01:35JPYNikkei Mfg PMI (JUL F)51.2-51.4
01:45CNYCaixin Mfg PMI (JUL F)47.848.348.2
05:00JPYVehicle Sales YoY (JUL)-5.4%

European Session

GMTCCYEVENTEXPPREVIMPACT
07:00CHFTotal Sight Deposits (JUL 31)-461.89BLow
07:00CHFDomestic Sight Deposits (JUL 31)-397.63BLow
07:30CHFPMI Mfg (JUL)50.550.0Medium
07:45EURMarkit/ADACI Italy Mfg PMI (JUL)53.954.1Low
07:50EURMarkit France Mfg PMI (JUL F)49.649.6Low
07:55EURMarkit/BME Germany Mfg PMI (JUL F)51.551.5Medium
08:00EURMarkit Eurozone Mfg PMI (JUL F)52.252.2Medium
08:30GBPMarkit UK PMI Mfg SA (JUL)51.551.4Medium

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EURUSD1.06201.08131.08991.10061.10921.11991.1392
GBPUSD1.53611.54891.55561.56171.56841.57451.5873

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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