- UK car production jumps 51% in July compared to June, but is still -21% compared to last year
- UK Consumer dependent businesses are slashing jobs at the fastest rate on record as the Government withdraws from the furlough scheme
- US Dollar (USD) investors focus on Jerome Powell’s speech at the virtual Jackson Hole symposium where a significant policy shift to AIT is expected
- US GDP & initial jobless claims due to be released, will initial claims remain above 1 million?
The Pound US Dollar (GBP/USD) exchange rate is moving cautiously higher, advancing for a third straight session. The pair settled +0.44% on Wednesday at US$1.3208. At 06:15 UTC, GBP/USD trades +0.04% at US$1.3213, having traded as high as US$1.2323 in the Asian session.
UK car production rose sharply in July, an encouraging sign for the economy. However, levels remain well below last years’ levels after production halted completely in April for lockdown. 85,696 cars were produced in July, this was up 51% from June, but down 21% on the previous year. Whilst the figures show a significant improvement as the economy reopens and demand returns, there is still a long way to go.
Less encouraging news flow came from a CBI and OECD report which warned of huge service sector job losses in August as the government started to withdraw from the job retention scheme. Those companies reliant on consumer spending slashed jobs at the fastest pace on record this month, whilst businesses and professional services reported the sharpest decline in jobs since 2009.
Attention will now turn to the Jackson Hole symposium. Bank of England Governor Andrew Bailey is due to speak tomorrow. Investors will be listening closely for any thoughts on negative interest rates.
The highlight of the week is expected to be Federal Reserve Chair Jerome Powell’s speech which is expected to take place at 13:10 UTC today.
Analysts and the markets expect Jerome Powell to signal a change in policy to Average Inflation Target (AIT). This means that inflation will be allowed to overshoot 2% in order to support economic activity and rates will ultimately stay low for longer.
Such an announcement from the Fed wouldn’t necessarily be a huge surprise, however it could still cause significant volatility in the US Dollar given that it may not be fully priced in.
Prior to the Fed’s appearance data including the US GDP revision and initial jobless claims will also be in focus.