Good morning

  High Low     High Low
EUR/USD 1.0958 1.0928   USD/ZAR 15.2126 15.1500
GBP/USD 1.4860 1.4818 GBP/ZAR 22.6 22.44
EUR/GBP 0.7391 0.7356 USD/RUB 71.69 70.11
GBP/EUR 1.3594 1.3530 USD/ILS 3.9054 3.8842
USD/JPY 121.14 120.90 S&P 500 2045 2038
GBP/CHF 1.4706 1.4621 Oil (Brent) 36.63 36.20
GBP/AUD 2.0522 2.0468 Gold 1075.0 1071.0

After a quiet start to the trading day yesterday, the GBP roared to life and fell like a stone to trade just shy of breaking 1.48 after the UK data agency published the government’s borrowing figures.  The UK’s public finances data showed the government had borrowed £66.9bn in the financial year. But the Office for Budget Responsibility forecast borrowing of £68.9bn for the year, only £2bn more than the latest figure. As I wrote in yesterday’s blog, the GBP is looking weaker by the day, and further losses to 1.4569 are a matter of when not if. Yesterday was all about the GBP which meant (again as I wrote first thing yesterday) vs the EUR the GBP also fell from 0.7330 (1.3640) to 0.7416 (1.3485) as a result. The GBP (EUR) has since recovered to 0.7355 (1.36) at the open today. I had mentioned yesterday the GBP was likely potentially to fall to 0.7450 (1.3422) but thankfully that was not reached, but close enough you could say. Later this morning the UK data agency publishes the UK 3Q GDP numbers with the number on the right below, Q2,  and left the prediction for Q3. Truth is the UK economy is healthy and should the number come in line with expectations I would expect the GBP to rally somewhat. That is already evident with the rally this morning to 1.4860 (USD) and 0.7350 (EUR).

09:30   GBP GDP (YoY) (Q3) 2.3% 2.3%
09:30   GBP GDP (QoQ) (Q3) 0.5% 0.5%

With the US 3Q GDP numbers coming in at 2% YoY the US economy stays on track for now. As I mentioned above, the USD did not react (vs EUR) when the GDP numbers were published and it is my opinion that with 36 hours to go before the start of the long weekend in Europe, the USD is likely to have a sleepy run in. Or not! I have a feeling FX traders might be tempted by the lack of liquidity to test the EUR’s resolve and try push the USD higher. Remember the US is working both Friday and Monday so the reduced liquidity could see the USD rally with little input from the Europeans to quell the rally. Then again, traders are not robots and generally use the time to put their feet up and play scrabble.

Have a good day ahead


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