The US dollar climbed to a two-week high against a group of currencies and may continue to rise with analysts expecting revised US GDP data to show faster growth over the second quarter in what could be a fresh signal for the Federal Reserve to begin reducing monetary stimulus. The sterling bounced back from recent losses after Governor Mark Carney did not add to the forward monetary policy guidance the Bank of England launched. As a result, solid UK data over the coming weeks may continue to support expectations that interest rates in the UK will rise ahead of the BoE’s unemployment-linked 2016 estimate. Safe haven buying on Syria concerns weighed on the euro and supported the Japanese yen and Swiss franc although comments from US President Barack Obama, have eased fears of an imminent military strike in the Middle East. However, the euro has suffered further losses after German unemployment data missed forecasts.

GBP

The sterling erased a portion of the losses suffered in the run-up to Carney’s speech after the Bank of England Governor took a softer approach to forward monetary policy guidance than some had feared. The sterling had fallen sharply in recent sessions ahead of Carney’s speech to businesses in Nottingham amid concerns he would look to communicate the BoE’s lower rates for longer pledge more aggressively. Rather than attempt to bend market expectations, Carney focused more on explaining very clearly the monetary conditions the BoE is looking to promote, and particularly getting more finance to businesses to help bolster the recovery.

EURO

The euro slipped to two-week lows against the US dollar after weaker-than-expected German unemployment data raised question marks about the sustainability of a eurozone economic rebound. While Germany’s overall jobless rate stayed at 6.8 per cent in August, an additional 7,000 individuals became unemployed versus estimates of a 5,000 drop. Investor preference for safety in the US dollar also weighed on the euro.

USD

The US dollar moved to a two-week high against a basket of currencies in front of data which analysts expect to show faster US economic growth over the second quarter than initially thought, adding to the case for the Federal Reserve to slow monetary stimulus. Revised figures will probably show GDP expanded by 2.2 per cent (y/y) over the second quarter compared with the initial reading of 1.7 per cent which had missed expectations.

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