15/09 – Ranges holding for now

Jeremy Thomson-Cook
Jeremy Thomson-Cook 15 September 2020

GBP: Kept lower by parliament

EUR: Wants to press higher

USD: Chinese retail sales push USD to 2 week low


Sterling is rightfully ignoring this morning’s run of jobs numbers; it is only Brexit that moves the pound at the moment.

Unemployment statistics don’t have the diagnostic powers they used to given the furlough scheme’s ability to put many workers and their jobs in state of suspended animation. It is the ending of the furlough scheme that represents a true reckoning for the UK labour force; for now the knowledge that the claimant count of benefits such as Universal Credit continues to increase and earnings are falling on average sets up our belief that a consumer-led recovery remains unlikely.

Similarly, while GDP statistics in the coming weeks will show the technical recession will be over, the reality of lower wages and uncertain employment for most of the UK remains.

Movements in parliament yesterday mean the sterling underperformance on political issues still has room to run with amendments and a Lords debate still to come.


The single currency is back to putting pressure on the USD and GBP this morning but does not have the strength to break out of any ranges so far. The main note for the euro today will be the publication of the latest ZEW economic confidence number from Germany at 10am that may be enough to stop any rally in its tracks.

Cautionary words from the ECB’s Chief Economist Philip Lane yesterday that the central bank could cut rates further than where they currently are has kept the euro from pressing higher but stronger data can easily overawe such pronouncements.

US Dollar

Stronger Chinese retail sales and a subsequent pick up in risk appetite was enough to push the wider USD to its lowest level in a fortnight yesterday with traders also happy to get short the greenback ahead of the Federal Reserve meeting tomorrow night. Relying on the Federal Reserve to break the USD lower however may be too much to ask and we doubt the rhetoric from tomorrow’s meeting will be more forceful than the notes from Chair Powell’s announcements at Jackson Hole.


Aussie dollar has picked up overnight following the latest minutes from the Reserve Bank of Australia suggested that the central bank will not be adding to its current stimulus measures anytime soon. News that Chinese retail sales figures also rose will have helped the AUD too.

Have a great day.