The euro and British pound remain fairly range bound across the majors and against each other, as the EURGBP pair spent the day between 0.8775-0.8825. There wasn’t much in the way of major economic data, though Eurostat’s flash estimate of Euro-zone CPI showed that the annual rate of growth rose to -0.2 percent in August from -0.6 percent. The move was generally in line with expectations and didn’t have much of an impact on the euro as the European Central Bank has said in the past that they anticipate annual inflation rates will remain temporarily in negative territory before turning positive again later this year.
Meanwhile, both GBPUSD and GBPJPY remain below key resistance at 1.6350 and 153.50, respectively, after Friday’s preliminary reading of Q2 UK GDP was revised up to -0.7 percent from -0.8 percent and the annual rate was revised to -5.5 percent from -5.6 percent, though this was still the worst annual decline since recordkeeping began in 1955. A breakdown of the report showed that revisions were due to manufacturing, energy extraction and wholesale and motor vehicle services, improvements that were partly the result of a government scrappage program that offered subsidies to consumers who traded in old cars for new ones. On the other hand, consumer spending and investment remained weak at -0.7 percent and -4.5 percent, respectively. While there are still major downside risks for growth in the UK, leading indicators for GDP like PMI services and PMI manufacturing have shown signs of expansion in July. Nevertheless, PMI readings above 50 for the months of August and September would be necessary to indicate a legitimate bounce.