- 09:30am UK Manufacturing Production m/m
Domestically, there was a stronger than expected reading for the Halifax house-price index while the British Chambers of Commerce was downbeat over the growth outlook, but the latest KPMG survey recorded increased labour shortages and upward pressure on wages.
Euro and dollar developments still dominated during the day. As expected, the ECB left the main refi rate at 0.0% at the latest council meeting and there was no change in forward guidance.
Bank President Draghi stated that a decision on the bond-purchase programme would be made in autumn, but the bank did not want to be tied to a specific timeframe. Draghi also stated that FX moves would be monitored closely due to the impact on growth and inflation trends. Nevertheless, the lack of more forceful rhetoric triggered fresh Euro buying with EUR/USD back above 1.2000.
US jobless claims rose sharply to 298,000 in the latest week from 236,000 previously, primarily due to the impact on hurricane Harvey which triggered an increase in Texas claims of over 50,000 on the week. The dollar overall was unable to make any headway during the day and losses accelerated on Friday with the US trade-weighted index at the lowest level since early 2015.
GBP/USD advanced to 5-week highs near 1.3150, although GBP/EUR retreated back below 1.0900 as the dollar index hit 31-month lows on Friday.
The latest UK industrial production and trade data will be released on Friday with markets expecting a small gain in output. A sharp improvement in output and exports will be needed to spark increased confidence in the outlook after a run of generally disappointing official data this year.
Position adjustment is liable to dominate EUR/USD on Friday with central bank commentary also in focus with the risk of further volatile trading conditions.