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The US election, interest rates and key economic releases loom as threats to major currencies.
In the absence of significant economic data, currency markets looked to smaller indexes and older reports to direct their movement. The running theme of the US election and its associated risks meanwhile continued to colour the overriding discourse.
The pound edged around a quarter of a cent higher against the euro, putting it in touching distance of its recent highs. GBP/USD stabilised after falling in the morning session, while EUR/USD lost around 0.25% over the course of Tuesday.
It seems sterling markets are now predicting the Bank of England will cut interest rates more aggressively than expected. This is not based on new data but rather last week’s unexpected retail sales contraction, which helped to fuel hopes the Bank would react to boost growth.
Existing home sales in the US fell by 5.4% month-on-month in June. That’s the sharpest decline in two years, partly explained by the median sales price setting a new record of $426,900.
Kamala Harris has enjoyed a swift passage to presumptive Democratic nominee, but she now needs to make some big decisions. First up is selecting her running mate. Josh Shapiro, Mark Kelly and Roy Cooper — all of whom hail from key swing states — are said to be the favourites.
US Secret Service director Kimberly Cheatle resigned yesterday after the assassination attempt on Donald Trump. Her decision follows an uncomfortable appearance before lawmakers, in which she was unable to provide answers on how the shooter was allowed to get so close.
Music streaming service Spotify saw its share price surge by over 14% yesterday after it reported record quarterly profit. Paid subscribers grew 12% in the second quarter of 2024, while revenue from premium subscribers rose 21% thanks to price increases.
Spotify wasn’t the only large company reporting earnings yesterday. Tesla released their own set of figures after market close, while BT, Vodafone and Astrazenica will also join the growing pre-summer scramble.
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GBP: Looking vulnerable
Sterling has enjoyed some real strength recently, but its position seems once more to be under threat. The pound has underperformed a basket of currencies this week (aside from the antipodean dollars) and this morning’s services data could fuel further weakness.
GBP/USD: the past year
EUR: Confidence builds
The eurozone’s preliminary consumer confidence indicator for July increased to its highest level since February 2022. While still below the ten-year average, interest rate cuts and the diminished threat of the far-right in France have buoyed the mood in consumer markets.
GBP/EUR: the past year
USD: Will growth bounce back?
The US economy is looking to better its first quarter growth of 1.4% when preliminary Q2 GDP figures are released on Thursday. Economists are predicting that number to rise to around 2%, which would present the Federal Reserve with an interesting conundrum.
EUR/USD: the past year
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