US retail sales and earnings in focus

Market reports
Thanim Islam
  • Goldman Sachs reduce likelihood of US recession
  • UK supermarket inflation drops again
  • ECB Nagel suggests rate hike in September not a guarantee


Ahead of Wednesday's inflation numbers, GBP declined for the second consecutive day as markets continue to take profits following the gains of last week.

ECB Nagel seemed less convinced that after a July hike of 0.25%, the ECB will have to hike again by another 0.25%, stating that a hike after July will be data dependent. Final revisions of June inflation will be out on Wednesday.

Goldman Sachs lowered their estimates for a US recession from 25% to 20%, citing that recent fundamentals point to rapid disinflation that will be painless for the US economy.

Data this morning from Kantar has shown that UK supermarket price inflation has dropped at its fastest pace since peaking earlier this year. Price growth fell by 1.6% to 14.9% in the four weeks to July 9th, marking the fourth consecutive month of falling prices – a sign that the cost of living crisis may be easing.


Market rates

* Daily move - against G10 rates at 7:30am, 18.07.23

** Indicative rates - interbank rates at 7:30am, 18.07.23

Data points


  • EUR – ECB Villeroy
  • USD – Fed Barr and Gibson

Our thoughts

Quiet day in the markets yesterday in the absence of any major news, and as markets digested the slower growth data from China yesterday. Today's agenda will fall on US retail sales as well as earnings figures from the likes of Bank of America, Morgan Stanley, and Bank of New York Mellon. A stronger retail sales number from the US will be encouraging on the US growth story, and could give USD some support and encourage buying, given technically USD is at oversold levels. Earnings figures will be key to gauge what the outlook is likely to be on the risk appetite front.

GBP volatility has dropped since last week as markets wait for tomorrow morning's inflation numbers. As mentioned, yesterday the key number will be the core inflation number which is currently expected to remain at 31-year highs at 7.1%. A lower number will likely suggest the Bank of England will hike interest rates by 0.25% in August versus current market pricing of 0.50%, and likely lead to GBP dropping off the recent highs. And of course, should this core number come in higher, then markets will likely price in more hikes that will be needed by the Bank of England.

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