UK
On Friday, the UK showed UK PPI Input m/m rose to 1.7% in July, less than the expected 2% rise by economists. Following the release of the UK factory output price figures for July at 930am on Friday, sterling was little changed against most major counterparts, trading at 1.2694 against euro and 1.5591 against the US dollar. GBPEUR traded at a low of 1.2691 on Friday, showing a high of 1.2771. This morning it is trading around 1.2750 and with strong support in place at 1.2716, sterling has a platform to test the next resistance at 1.2794 today.
GBPUSD saw a low of 1.5577 and a high of 1.5700, this morning we have seen markets open slightly lower at 1.5677. Two sets of support are in place at around 1.5500 and the technical resistance starts at 1.5733 so we can expect the start of this week to remain relatively range bound.
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WORLDWIDE
Industrial production in France remained unchanged in June, as factory activity continued to be subdued by the euro area debt crisis and adds to the outlook that the Eurozone’s second biggest economy may have slipped into recession in Q3.
US import prices unexpectedly decreased in the month of July, although the report also showed an unexpected increase in export prices. Upon release of the data, the dollar was trading at 1.5597 against the pound and 1.2260 against the euro.
EURUSD edged lower on Friday, extending its setback from its monthly high of 1.2442 at the beginning of the week, as disappointing Chinese data sparked risk aversion and boosted the greenback across the board. We saw a new low of 1.2242 by the end of Friday’s European session. This rally is currently testing resistance around the 1.2300 area. Already this morning we have seen a high of 1.2301, a break above 1.2323 at close could spark a new rally.
Canada’s unemployment rate rose to 7.3% in July from 7.2% in June. It was an unexpected decline as the market was expecting an increase of 9,000 payrolls with the unemployment rate remaining at 7.2%. GBPCAD saw a subsequent high of 1.5573 after the release.
Japan’s GDP added just 0.3% in the second quarter of 2012 compared to the previous three months, suggesting that the recovery from the March 2011 earthquake and tsunami remains stuck in neutral. FTSE 100 futures are trading lower this morning as a result and GBPJPY is currently trading at around 122.70 after a low of 121.67 over the weekend.
Further evidence that Asian markets are struggling emerged this weekend after Hong Kong expanded less-than-expected in Q2. Falling demand elsewhere continues to weigh on the economy’s exports, prompting the government to cut the growth forecast for the full year. GBPHKD is currently trading at 12.14 after a low of 12.02 at the end of July.
