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The Market Last Week

Global equity markets finished in the green last week, buoyed by upbeat corporate earnings releases across major financial markets. UK markets ended the week higher, amid a rally in commodity sector stocks. On the economic front, a record new export orders since 2010 boosted UK’s manufacturing activity in July, while the nation’s service activity also grew at a quicker than expected pace in the same month. In other major news, the Bank of England maintained status quo on the interest rate and bond buying programme at its monetary policy meeting last week. Eurozone markets ended mostly higher last week, as growth in the region picked up on both, annual and quarterly basis in the second quarter of 2017. US markets ended on a stronger footing last week, boosted by positive corporate earnings. In economic news, US jobs report came in better than expected as unemployment rate eased in line with expectations in July, while the economy added more number of jobs than expected in the same month. Asian markets ended mixed last week with the Hang Seng index closing on a stronger footing following a 4-month high reading of a private gauge measuring China’s factory activity in July.

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Currency Update

The Euro ended the week on a positive note against the USD, following upbeat economic data releases in the region. However, the Pound fell against the USD, despite positive readings on the manufacturing and services PMI for July. The Greenback ended higher against most of its major peers, following an upbeat jobs report for July, which boosted expectations for a Federal Reserve rate hike.

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The BoE lowers growth outlook

The BoE monetary policy committee voted 6-2 to hold the key interest rate steady at 0.25%. The central bank left bond buying programme steady at £435 billion while its corporate-bond purchase programme was also unchanged at £10 billion. Central bank Governor, Mark Carney reiterated that uncertainty over Brexit will continue to weigh on growth in the coming years while adding that the British economy is projected to grow by 1.7% in 2017 and 1.6% in 2018, down from its earlier estimate of 1.9% and 1.7% respectively. Inflation is expected to peak at around 3.0% by October 2017, before gradually moderating, and falling to 2.2% by 2020.

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The Week Ahead

Ahead in the week, traders will keep an eye on consumer inflation reports from the Eurozone and US along with UK’s manufacturing and industrial output reports for further cues.

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