GBP Recovers in Anticipation of Tomorrow's GDP Data

Market Reviews

The British pound recovers broadly today on rumor that the EU is considering to offer a major Brexit concession to the UK. But there is so far no detail on the deal. The next important event for the pound is UK GDP, to be released tomorrow.

The US dollar is trading mixed today. US initial jobless claims fell by 6k to 213k in the week ended August 4. The four-week moving average of initial claims dropped 0.5k to 214.25k. Continuing claims rose 29k to 1.755m. Four-week moving average of continuing claims rose 3k to 1.74525m. Headline PPI rose 0.0% mom, 0.3% yoy in July, missed expectation of 0.3% mom, 3.4% yoy. Core PPI rose 0.1% mom, 2.7% yoy, below expectation of 0.3% mom, 2.8% yoy.

Global shares were mixed today. DAX fell by 0.27% while FTSE dropped by 0.7%. Earlier in Asia, major indices closed mixed. China Shanghai SSE rose by1.83% at 2794.38. Hong Kong HSI grew by 0.88%. But Nikkei and Singapore Strait Times are down -0.2% and -0.4% respectively.

Today’s data also showed, that CPI accelerated to 2.1% yoy in July, up from 1.9% yoy, above expectation of 2.0% yoy. PPI slowed to 4.6% yoy, down from 4.7% yoy, matched expectations. Released from Japan, M2 rose 3.0% yoy in July, below expectation of 3.1% yoy. Machine orders dropped sharply by -8.8% mom in June versus expectation of -0.8% mom. Machine tool orders rose 13.0% yoy in July.

Economists forecast that the Bank of Japan will not start unwinding stimulus until 2020 or later. On the economy, economists projected core CPI, excluding sales tax hike impact, to rise 0.9% in the fiscal year to March 2019, same as the prior fiscal year. That’ notably lower than BoJ’s own forecasts of 1.1% in fiscal 2019 and fiscal 2019. Economists also saw Japan GDP to grow 1.1% this fiscal year and then slow to 0.8% next.