Sterling fell after Tuesday’s European open, primarily under the influence of weaker risk conditions and a firmer dollar. There was buying on dips with net support from expectations that the Bank of England would continue raising rates beyond peak rates from the Fed and ECB. The latest UK GDP data will be released on Friday with expectations of a slight monthly increase. Overnight, the NIESR issued a downbeat assessment of the medium-term UK outlook with a warning over the risk of recession during the year ahead.
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The Euro lost ground after Tuesday’s European open with weaker risk conditions sapping support as the dollar continued to draw net support. The Euro continued to lose ground into the New York open with lows against the US currency as the Italian windfall tax on banks undermined equities and Euro confidence.
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The US NFIB small-business confidence index strengthened to 91.9 for July from 91.0 previously and above expectations of 90.6. The reading is still below the long-term average, but the highest reading since December 2021. Companies expect the economy to improve, but are more pessimistic surrounding earnings which suggests that margins are being squeezed amid the increase in costs. The June trade deficit narrowed to $65.5bn from a revised $68.3bn the previous month and compared with expectations of around $65.0bn as exports edged higher and imports retreated on the month. The overall data impact was limited during the day.
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