Sterling has rebounded off lows witnessed post the MPC’s vote split announcement. Bank of England Governor Carney’s inflation report was delivered with a very neutral tone, attempting to quash rumours surrounding when the interest rate tightening cycle will begin. Carney did not say rates would rise around the turn of the year in July’s speech, while stressing that the pound is working to keep inflation down. The currency’s persistent strength is having an impact on policy, but, it has not taken away the need for a rate rise. This is not a debt fuelled consumer recovery

US dollar

The dollar skidded down post an unexpected fall in ADP employment numbers, rising by only 185,000 versus forecasts of 215,000. This is not a disaster given that the all important non-farm payrolls report is expected to show the economy added 220,000 jobs in July. There are still plenty of reasons to remain bullish on the US dollar.

Euro

‘Up is better than down’ is probably the most suitable statement to describe eurozone service sector data. July’s composite index climbed to 53.9 v 53.7, still expanding at a pace that is commensurate with a growing economy. The euro was a bit of a damp squib, reacting solely to US data and edging lower against the British pound.

Australian dollar

Australian unemployment rose to 6.3 per cent from six per cent, the highest level in more than six months. The participation rate did however increase, creating a headache for the Royal Bank of Australia as they are under pressure to help stimulate the economy, whilst dealing with burgeoning house prices across the nation. The Australian dollar only dipped slightly post the announcement, still tracking above 0.7300 against the US dollar.