The British Pound is trading lower against the Dollar after better-than-expected U.S. economic reports regarding private payrolls and ISM manufacturing. The positive nature of both upbeat reports dampened worries about the U.S. economy’s growth.
The Sterling received its initial pressure after July services PMI posted an unexpected decline. The weakness in this number raised some concerns that the economy may be cooling down. Despite a recent rise in second quarter GDP and relatively high inflation, investors are still worried the new austerity measures combined with higher taxes will cool down the economy.
Along with the Sterling, the Euro was also down for the first day in close to a week. The weaker tone was set in the Euro following a worse-than-expected final July services PMI reading for the Euro Zone. The services purchasing managers index for the EZ rose slightly to 55.8, but fell short of a preliminary reading of 56.0.
In addition to the bearish economic reports, traders may be shedding Euros and Pounds ahead of tomorrow’s Bank of England and European Central Bank policy meetings on August 5. Both central banks are expected to keep interest rates unchanged at historically low levels. The BoE is going to address the effects of the new austerity measures and tax hikes on monetary policy and ECB President Trichet will discuss the surprise strength in the Euro Zone economy.
Local: 312-896-3930
Toll Free: 800-971-2440
Email: Info@BrewerFX.com
Website: www.BrewerFX.com
DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
