GBP

Sterling has gained modestly against both the euro and the dollar in early trading , helped by improved market sentiment. UK public borrowing fell less than expected in August , highlighting the hefty ongoing costs of the Covid pandemic. Office for National statistics figures showed public sector net borrowing , excluding state -controlled banks totalled £20.5 Bln down £5.5Bln from last August . Analysts had forecast £15.5 Bln for last month . Although borrowing has fallen substantially during the current year it is still on track to be at historical highs . Chancellor Rishi Sunak warned ministers must “control “ the public finances following the data’s release .

EUR

The euro has recovered against the dollar from monthly lows hit yesterday , as market sentiment improved and demand for the safe -haven dollar fell in early trading. In a interview this morning Bank of Greece governor and ECB policymaker Yannis Stournaras warned against overconfidence that the pandemic is over and underlined that the ECB will have to continue providing significant support even after the crisis is over , given that its inflation projections still undershoot its 2% target .

USD

Demand for the dollar has eased this morning as markets become less fearful of contagion to the wider Chinese economy from the country’s Evergrande financial crisis .Although the country’s second largest property company could miss a debt payment this week many Bank’s including Barclays’ Citi and UBS believe this is not a “ Lehman “ moment for China and will not echo the Banking crisis of 2008 . Another light day of economic data today as markets look ahead to the Central bank policy meeting starting tomorrow .

Economic Calendar

1.30 pm US Building Permits
1.30 pm US Housing Starts