Marketwatch EU & UK

Daily Insights
July 31, 2023

The euro is consolidating around the 1.10 level against the greenback ahead of Eurozone CPI later today. The yen weakened 0.4% as the Bank of Japan announced an unexpected bond-purchase program to contain higher yields after last week’s policy announcement drove the benchmark 10-year debt to a 9-year high. USD/JPY rises towards 142 and GBP/USD trades mid 1.28-129 ahead of a busy week in the UK. The Bloomberg Dollar Index is higher this morning but still expected to end the month with a 1.2% loss MoM.

In the UK, the Bank of England takes center stage this week as it faces another “Knife-edge” situation where there is a clear risk of another 50-basis point surprise vs. the estimated 25-basis point on Thursday. A quarter point increase is in line with the current downward trajectory of both Headline and Core inflation, but there are drivers of these price pressures that have proved resilient in the past, indicating a clear risk of the BOE following the 50—bps June surprise into the August meeting. Markets are widely expecting a 25-bps rate hike and have priced in a 40% chance of a half-point increase.

In the Euro-area, we’re expecting GDP and CPI data today. Growth data for the second quarter is expected to show that the region grew slightly after stagnating at the beginning of the year (Est.0.2% vs. prior -0.1%). Inflation numbers likely fell in July, but the core gauge is not expected to fall substantially in July and August (CPI YoY – Est. 5.3% vs. prior 5.5%; CPI Core YoY – Est. 5.4% vs. prior 5.5%).

In the US, recent data is moving towards a soft- landing narrative and last week’s quicker-than-expected deceleration of the Employment Cost Index (Fed’s preferred wage gauge) adds evidence that the disinflation in June’s CPI report was not just simple luck .Although Inflation data for the month of June was soft, activity data kept surprising to the upside but this week we’re expecting fresh new data that support a soft landing view – Jobs data is expected to show consistent hiring (Non-Farm Payrolls, Fri.- Es.t 200k vs. prior 209k) and ISM Surveys will show activity is increasing (ISM Manufacturing , Tue. – Est. 46.9 vs. prior 46.0; ISM Services, Thur. – Est. 53.0 vs. prior 53.9).

Economic Calendar

CNY - Non-Manufacturing PMI
EUR - CPI Flash Estimate y/y
EUR - Core CPI Flash Estimate y/y
CNY - Manufacturing PMI

Market Indicators

Currency Pairs
Pair High Low
eur/gbp 0.85906 0.855
gbp/usd 1.28725 1.28241
gbp/aud 1.93239 1.91232
gbp/nzd 2.08938 2.06871
usd/jpy 142.688 140.69
eur/usd 1.10456 1.1005
gbp/jpy 183.189 180.696
eur/cnh 7.90254 7.86
usd/cnh 7.1592 7.13058
Equities and Commodities
Nasdaq 100 15761.9
DOW 35505.7
S&P 500 4589.84
WTI 81.47
GOLD 1969.08

This document is for information purposes only and does not constitute any recommendation or solicitation to any person to enter into any transaction or adopt any trading strategy, nor does it constitute any prediction of likely future movements in exchange rates or prices or any representation that any such future movements will not exceed those shown on any illustration. All exchange rates and figures appearing are for illustrative purposes only. You are advised to make your own independent judgment with respect to any matter contained herein.

About Francisco Mioludo


Francisco Mioludo is a trader for GPS Capital Markets at the London office. Before joining GPS, Francisco worked in Market Risk at a commodity trading firm in London where he gained valuable skills for his current role. Francisco looks after our EU and UK sales team with everything from analysis to structuring and pricing.