Published: 03/08/2023 By ECAPThe British Pound was relatively flat this morning ahead of the Bank of England's monetary policy decision later today. The central bank is expected to raise interest rates to a 15-year high of 5.25% from 5%. Ultimately, U.K. inflation fell to 7.9% in June, easing off 8.7% in May, which points to a 25-basis point hike, instead of a repeat of last month’s 50-basis point increase.
The Euro slid against a basket of currencies after German imports slumped 3.4% in June, indicative of weak domestic demand in the largest economy in the eurozone. Looking forward, Services PMI data is due through the eurozone and should show this sector in expansion, in contrast with the weak manufacturing activity data seen earlier this week.
The U.S. Dollar rose in early European trade this morning, continuing the previous session’s positive tone as strong private payrolls data overshadowed Fitch’s downgrade of its U.S. sovereign rating. In fact, the Dollar Index traded 0.2% higher at 102.60, just off a four-week high of 102.82 seen yesterday, when the index gained 0.5%.