Sterling was boosted by stronger than expected GDP data.
The Euro gained some support from further speculation over increased German budget spending, although EUR/USD was held in tight ranges.
Overall risk appetite held firm on hopes for US-China trade progress and the yen and Swiss franc lost ground as global bond yields moved higher.
Precious metals declined sharply as defensive demand remained weaker with gold below $1,500 per ounce. Equities struggled to make headway despite the firmer risk tone amid earnings reservations.
Sterling was boosted by stronger than expected GDP data and hopes that disruptive Brexit outcome could be avoided with GBP/USD testing 6-week highs.
Oil prices were boosted by firm risk appetite and hopes for an extension to OPEC production cuts.
Trading conditions were relatively subdued on Monday as if often the case following the US employment release on the previous Friday and there were no major data releases with caution ahead of Thursday’s ECB policy meeting.
According to the latest estimate, July GDP increased 0.3% after no change in June and above consensus forecasts of 0.1% with an unchanged year-on-year increase of 1.0%. Industrial production increased 0.1% for July above market expectations of a 0.1% decline while manufacturing output gained 0.3% on the month while construction output data also beat forecasts.
Bank of England MPC member Vlieghe stated that interest rates were likely to stay lower for years, although he also stated that it is unlikely that the bank would be able to cut rates as it did in the previous downturn.
Prime Minister Johnson stated that there would be a commitment to reaching a Brexit deal and there was some speculation that there could be a move to find a compromise on the Northern Ireland border issue which supported sentiment.
After pushing higher on the data releases, Sterling continued to gain ground as fears over a disorderly EU exit faded slightly. The Bill blocking a ‘no-deal’ outcome on October 31st was given royal assent and came into law. GBP/EUR settled around 1.1170 while GBP/USD stabilised near 6-week highs just below 1.2350.
The House of Commons again rejected Prime Minister Johnson’s call for a General Election and parliament will be suspended until October 14th.
|07:45||Industrial Output MM(JUL)||-||-2.30%|
|09:00||Industrial Output MM SA(JUL)||-0.30%||-0.20%|
|09:00||Industrial Output YY WDA(JUL)||-||-1.20%|
|09:30||GBP Average Earning Including Bonus(JUL)||3.70%||3.70%|
|09:30||GBP Claimant Count Change(M/M)(AUG)||-||28.0K|
|09:30||GBP Unemployment Rate(JUL)||3.80%||3.90%|
|13:15||CAD Housing Starts(AUG)||203.5K||222K|
|13:30||CAD Building Permits (M/M)(JUL)||1.50%||-3.70%|
|15:00||USD JOLTs Job Openings(JUL)||-||7.348M|