GBP/USD: UK and US Manufacturing in Focus As Investors Brace For A Busy Week

After a weak start the euro picked up versus the dollar in early trade, reaching a session high of US$1.1094 so far. The common currency has been unable to hold this higher ground and is as edging back towards the flat line at the time of writing.

The euro fell in early trade on Wednesday, however it quickly picked up following a barrage of stronger than forecast data. First up, German factory orders rebounded in September, adding to signs that the euro area economy has passed the worst of its recent troubles. Factory orders increased a solid 1.3% month on month in September, well ahead of the 0.1% increase analysts had pencilled in and the first increase in three months. The euro rose after the report.

Eurozone retail sales data was another bright spot this morning. Retail sales in the bloc accelerated more than expected year on year in September indicating a sustained domestic demand in Europe. Eurostat revealed that retail sales rose 0.1% month on month in August, for a 3.1% gain year on year. This was significantly up from August’s 2.5%.


Retail sales are a useful proxy for domestic demand, which has been supported by unemployment hitting an 11-year low. Retail sales are also an indication of future inflation. A solid increase in retail sales is a good sign for inflation down the road.

Whilst the euro advanced following the data, the move higher has been unconvincing, failing to break through $1.11.

Dollar Investors Await For Trade Deal News

After a strong previous session, the dollar is holding its ground on Wednesday. The greenback is supported by rising hopes of a US — China trade deal and improving outlook for the US economy. Investors are now waiting for further details on a US — China trade deal, such as when the phase one deal will be signed and a location. Without these details some disappointment could seep through. US officials are debating whether to cut levies imposed in September on Chinese products. Any news that the US will do this could spark volatility in the dollar.

There is no high impacting US data for investors to digest. Instead investors will continue watching trade headlines and turn towards Federal Reserve policymaker speeches planned for later today.

 

What do these figures mean?
When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.

For example, it could be written:

1 EUR = 1.12829 USD

Here, €1 is equivalent to approximately $1.13. This specifically measures the euro’s worth against the dollar. If the U.S. dollar amount increases in this pairing, it’s positive for the euro.

Or, if you were looking at it the other way around:

1 USD = 0.88789 EUR

In this example, $1 is equivalent to approximately €0.89. This measures the U.S. dollar’s worth versus the euro. If the euro number gets larger, it’s good news for the dollar.

 

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