Talking Points:
- British Pound May Rise as 2Q UK GDP Data Boosts BOE Rate Hike Outlook
- US Dollar Unlikely to Find Follow-Through in Consumer Confidence Report
Second-quarter UK GDP figures headline the economic calendar in European trading hours. An increase of 0.7 percent is expected, which would mark a pickup from the 0.4 percent gain recorded in the first three months of the year. An upbeat result would reinforce recent comments from BOE officials expressing concerns about wage inflation and fuel speculation about oncoming tightening. Needless to say, such a scenario is likely to bode well for the British pound.
Later in the day, the spotlight turns to July’s US Consumer Confidence gauge. A slight pullback is expected after the index hit a three-month high in June. US economic news-flow has increasingly outperformed relative to consensus forecasts since mid-May, however, opening the door for an upside surprise that may boost the US dollar. Follow-through may be limited however as investors withhold directional conviction until after the passage of Wednesday’s FOMC policy announcement.
The Australian and New Zealand dollar rose amid firming risk appetite as some Chinese stocks recovered after yesterday’s dramatic selloff. The Japanese yen underperformed as firming sentiment put pressure on the safety-linked currency. While mainland shares remained under pressure, Hong Kong’s Hang Seng Index advanced over one percent having lost more than 3-percent in the preceding session.
