Market Drivers – European Session 24/8/2022

The GBP/USD pair turned south and trades a handful of pips below the 1.1800 level, not far above a fresh multi-month low of 1,1716 posted on Tuesday. The greenback regains its dominance across the FX board, following a short-lived knee-jerk on Tuesday, following the release of tepid US growth-related figures. The S&P Global flash estimates for August hinted at a sharp deceleration in business activity.

The sell-off in European shares continued on Wednesday, as investors worried about an energy crisis and bleak growth prospects, while hawkish comments from the US Federal Reserve on monetary policy further pressured sentiment.

By 0716 GMT, the European Stoxx 600 index fell 0.2 percent, hovering near its lowest level in a month due to the poor performance of the mining sector.

But the energy sub-index rose 0.2 percent, extending gains for the seventh consecutive day.

Investors are cautious ahead of the Jackson Hole symposium after Federal Reserve Chairman Neil Kashkari in Minneapolis on Tuesday reiterated the US central bank’s focus on controlling inflation above all else.

The market is also awaiting the minutes of the European Central Bank meeting due on Thursday, which is also likely to appear hawkish.