Today is shaping up to be another interesting day, as the USD keeps pushing higher, while the GBP plunged to record lows in the Asian session. GBP/USD hit a low of 1.0357 (depending on your platform, but definitely under 1.0400) before hanging around 1.0500-50 levels in volatile trading ahead of the European session.

The dive continues from last week despite the 7th rate hike from the BOE, with little technical support for the quid at the moment after having hit its lowest levels since 1985 at the end of last week. Talks of potential intervention by the Bank of England is helping to salvage some losses during the session as cable moved back up to above 1.09, although it has reversed back down now and it’s trading below 1.07.

Belgian Business Sentiment

• Belgian business sentiment -11.8 points vs -8.3 expected
• August business sentiment was -5.8 points

This is a leading indicator and it’s certainly not pointing in the right direction.

ECB President Christine Lagarde Speaks

• Weak euro has added to build-up of inflationary pressures
• Risks to inflation are primarily on the upside
• Activity to slow substantially in the coming quarters
• We expect activity to slow substantially in the coming quarters
• Demand for services is losing steam
• We expect to raise rates further over the next several weeks
• Quantitative tightening to be considered once rate normalization complete
• We might have to take further measures if inflation not at target when rates at neutral
• Wants to reach neutral, will decide then if more action is needed
• Full text

A 75 bps ECB hike in October is now fully priced in but that was before this speech. The comments certainly underscore a deteriorating outlook but they’re nothing new. EUR/USD is volatile today but largely unchanged on this.

Gold XAU Live Chart