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  • The US Dollar is broadly stronger on the session with the latest flash PMI report from @IHSMarkit underscoring inflation pressures ahead of next week's Fed announcement. $DXY facing psychological resistance at the 93.00-handle, though. Link to Analysis - https://www.dailyfx.com/forex/market_alert/2021/07/23/us-dollar-firms-as-pmi-data-echoes-inflation-risk-cue-the-fed.html https://t.co/SzMzzxoYzN
  • Forex Update: As of 16:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.04% 🇪🇺EUR: -0.05% 🇬🇧GBP: -0.10% 🇨🇭CHF: -0.18% 🇦🇺AUD: -0.18% 🇯🇵JPY: -0.31% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/RykiRciAsZ
  • ECB's Weidmann: - New ECB goal does not mean there will be markedly higher inflation
  • ECB's Weidmann: - I expect inflation rates in Germany to rise to 5% by the end of 2021 - Governing council believes that expansive monetary policy is acceptable at the moment
  • Indices Update: As of 16:00, these are your best and worst performers based on the London trading schedule: US 500: 0.74% Wall Street: 0.51% Germany 30: -0.03% France 40: -0.08% FTSE 100: -0.12% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/iXJHlexTlA
  • USD/MXN trades directionless, oscillating between small gains and losses, near the 20.15 area. Get your $USDMXN market update from @DColmanFX here:https://t.co/FFr3rlGh6n https://t.co/7tniccl9S8
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.02% 🇪🇺EUR: -0.06% 🇬🇧GBP: -0.12% 🇨🇦CAD: -0.22% 🇦🇺AUD: -0.23% 🇯🇵JPY: -0.34% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/LZfExkLfjB
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: France 40: 1.31% Germany 30: 0.97% FTSE 100: 0.82% US 500: 0.57% Wall Street: 0.48% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/gUKOWwsere
  • The July flash PMIs from Markit don't paint the most encouraging picture. The US and UK composite activity measures have slide, the Eurozone's has actually advanced and Australia's has tumbled. Despite this picture, SPX just off its record https://t.co/HrcdPASU9Q
  • The July PMIs haven't triggered late-in-the-week volatility which leaves the likes of the $SPX just off its record. DailyFX's @JohnKicklighter discusses weekend and what's ahead 👇 https://t.co/oB9i7XAXCz
British Pound Heavy with Posen Set to Speak, Production Data Due

British Pound Heavy with Posen Set to Speak, Production Data Due

Christopher Vecchio, CFA, Senior Strategist
British_Pound_Heavy_with_Posen_Set_to_Speak_Production_Data_Due_body_Picture_5.png, British Pound Heavy with Posen Set to Speak, Production Data Due

British Pound Heavy with Posen Set to Speak, Production Data Due

Fundamental Forecast for British Pound: Bearish

The British Pound had a mediocre week, finishing in the middle of the pack among the major currencies covered here at DailyFX. It was relatively unchanged against the Euro, finishing a mere 0.02 percent higher, while it rallied for 2.35 percent against the Japanese Yen, the worst performing major this week. The GBPUSD was slightly higher as well, appreciating by 0.66 percent on the back of big moves coming in the second part of the week. Mainly, it is the catalyst for the British Pound’s midweek strength and then end of week weakness (if only briefly) that have piqued our interest and shape our bearish outlook for the week ahead.

Primarily, the Bank of England left its key interest rate unchanged and chose not to expand its asset purchase program, which currently stands at £325 billion. Many have been calling for additional easing from the BoE in light of a hamstrung fiscal program; no more stimuli for the economy can come unless it comes on the monetary side of the equation. For now, with no indication of what the voter breakdown on the Monetary Policy Committee was like, we must defer to central bank speak in the coming days to get a better clue at where the BoE’s collective mind is at. In this sense, perma-dove Adam Posen is set to speak on Monday, and it is likely he talks down the economic prospects of the United Kingdom as he trumpets the necessity for more quantitative easing. This, in turn, and especially after Friday’s disappointing producer price index reading, suggests that the British Pound should decline. Were he to take a more hawkish stance – again, very unlikely – this could lead to a strong performance by the Sterling to start the week (again, unlikely).

In terms of data due, there’s little hope on the way of seeing a stronger Sterling rooted in better than expected prints. Industrial and manufacturing production over the past several months has been in a sideways to downward trend, and that trend is expected to have continued through April. Industrial Production is forecasted to have contracted by another 1.0 percent in April on a yearly-basis, while Manufacturing Production is expected to find some relief, having gained 0.4 percent in April, according to a Bloomberg News survey.

Also due on Tuesday (alongside Industrial and Manufacturing data) is the NIESR GDP Estimate for May, which, after coming in at -0.2 percent in March, was revised higher to 0.1 percent and was reported as such in April. Given recent data, however, it is possible that this is revised lower. Rounding out the data for the week are trade balance figures on Friday, which are expected to show a slimmer deficit (this perhaps being the only bright spot for data this week). Overall, data remains weak and an ultra-dovish BoE policymaker is set to speak, suggesting that the Pound may be under further pressure amid renewed calls for more quantitative easing, ultimately a fiat currency diluting measure. – CV

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

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