September rate hikes less likely after weak European PMI round. Both the UK and Eurozone reports were much weaker than anticipated and signal an acceleration in the pace of contraction. At the same time the weakness is no longer concentrated in manufacturing, with demand falling across the board. Monetary policy is restrictive on both sides of the channel and the data makes a pause in the tightening cycle in September much more likely. Inflation data for August could still change the picture, with labour market data and wage growth of particular importance for the BoE. As it looks at the moment though, the ECB in particular may want to take a “wait and see” stance now, which makes Lagarde’s comments at the Jackson Hole meeting particularly important. Even if the ECB and BoE were to pause in September, both are likely to keep all options on the table for subsequent meetings and confirm the “higher for longer” stance.
Click here to access our Economic Calendar
Andria Pichidi
Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
