- Sterling Falls Below Key Mark as Weakness Prevails
- Euro Attempts Recovery With Fed Minutes to Come
- Stock Market Flat Early After Rocky Start to Week
The weakness in the GBP forex market continued on Wednesday. The currency has now been held below a key psychological mark of 1.38 against the Dollar with the main protagonist here being a CPI miss at 2%. COVID-19 cases are another factor as these continue to tick up stubbornly in the UK. The Euro has held up better above 1.17 as it attempts to remain some ground lost this week. Meanwhile, with Fed minutes to come later, trading on Wall Street remains quiet, early in the day.
Sterling Struggles Continue on CPI Numbers
Sterling has continued to flounder below 1.38 today as the CPI figure for July came in at 2%. This would typically be a high number, but it missed analyst expectations by 0.3%. This points to a possible weaker than expected economic recovery during a month where the country had fully reopened but was still weighed down by COVID-19 concern.
Cases of the virus have remained at a relatively high number and not shown the decreases that some had expected. Still, there appears to be no rush back with restrictions from the Boris Johnson government. They are hesitant to walk back any of the reopening promises they have made. This, combined with a lower CPI number would imply that the Bank of England would be in no hurry to withdraw any of the economic supports they have in place.
Euro Tries to Push Back Ahead of Minutes
The Euro traded back up a little today and is currently just above 1.17 against the Dollar as CPI numbers were confirmed at 2.2% for July. This is slightly above their UK neighbors for the bloc even though Europe too has been hit by some increase in the number of virus cases.
Still, those forex trading the Euro are aware of the current bearish trend with many moving to the safe-haven USD amid continuing virus concern and the surprisingly poor numbers coming from the US in terms of consumer confidence and retail sales. The resulting strength has accentuated the weaker positions of both the Euro which is slightly above its March low and the Pound.
Stock Market Flat Ahead of Fed Minutes
Forex brokers are not the only people experiencing a quiet start to the day. The trading on Wall Street has also been slow as most wait for the release of Fed meeting minutes. The focus within these minutes is set to be on if there may be any mention of tapering and what it indicates.
With that said, it seems to be the case that any tapering has very much been priced into the market already. This is particularly the case after a rather rocky start to the week with the S&P 500 recording its worst day of the month yesterday.