GB Pound
Sterling came under pressure.
Movements
GBPUSD opened at 1.3840 and depreciated throughout the week, briefly testing the 1.36 level on Friday. It closed at 1.3639, for a heavy loss of 1.45%.
GBPEUR opened at 1.1743 and traded lower, particularly in the second part of the week, closing at 1.1646 (-0.83%).
Movement rationale
Sterling weakened sharply against major rival currencies last week, with GBP/EUR falling below 1.17 while GBP/USD tested mid-July lows. The selling pressure was caused by a broad decline in investor sentiment (COVID and Afghanistan) and expectations that tapering by the Federal Reserve could impact the British currency. British economic data was mixed: the unemployment rate dropped to 4.7% and wage growth jumped by 8.8% in June, however the more recent jobless claims statistic disappointed, only showing a modest 7,800 drop in July. Also, disappointing retail sales data and softer UK inflation figures, which slipped to 2% last month and below expectations, eased the pressure on the BoE to tighten monetary policy, weighing on the Pound.
Week ahead
The UK economic data calendar remains relatively light, with the Markit's preliminary Purchasing Managers' Indexes for August standing out:
Calendar
Monday 9:30am | Markit Services PMI (Aug)
US Dollar
The Dollar moved to more-than-nine-month highs against major peers.
Movements
EURUSD began the week at 1.1785 and edged lower, traded down to 1.1666 on Wednesday, a level not seen since November. It finally closed at 1.1712, for a weekly loss of 0.62%.
GBPUSD opened at 1.3840 and depreciated throughout the week, briefly testing the 1.36 level on Friday. It closed at 1.3639, for a heavy loss of 1.45%.
Movement rationale
The Dollar kept pushing higher, buoyed by a flight to safety with rising coronavirus cases (America reported some 250k in one day, while daily average deaths has risen to 4-month high), caution relating to Afghanistan, and disappointing economic data. Furthermore, investors’ behaviour was also driven by tapering speculation following the latest Federal Reserve's meeting minutes, which hinted at a reduction in the bond-buying scheme in 2021, further pushing the Greenback upwards. Worse than expected US data, with Retail Sales falling by 1.1% in July, also added to a deterioration in market sentiment, which contributed to a global sell-off in global equities in favour of the Dollar.
Week ahead
The US economic calendar includes Powell's speech at Jackson Hole as main event, while also reporting the following:
Calendar
Monday 2:45pm | Markit PMI Composite (Aug)
Wednesday 1:30pm | Durable Goods Orders (Jul)
Thursday 3pm | Jackson Hole Symposium, Initial Jobless Claims (Aug 20), GDP Annualized (Q2)
Friday 3pm | Jackson Hole Symposium, Michigan Consumer Sentiment Index (Aug)
Euro
The Euro advanced against Sterling but lost further ground versus the Dollar.
Movements
EURUSD began the week at 1.1785 and edged lower, trading down to 1.1666 on Wednesday, a level not seen since November. It finally closed at 1.1712, for a weekly loss of 0.62%.
GBPEUR opened at 1.1743 and traded lower, particularly in the second part of the week, closing at 1.1646 (-0.83%).
Movement rationale
The Euro reached new lows against the Dollar last week, affected by the prospect of prolonged monetary stimulus in the Euro Area (the ECB has so far given no indication on scaling back its bond-buying program any time soon) and penalised by a broad rush for safe haven assets. On the data front, EU statistics confirmed the Eurozone economy grew 2% in the second quarter, with employment figures also improving in the April-June period. Also, inflation figures for July matched original estimates at 2.2%, with little market reaction.
Week ahead
The Euro will also be looking towards PMI data for both services and manufacturing, with the Eurozone economic data calendar includes the following:
Calendar
Monday 9am | Markit PMI Composite (Aug)
Wednesday 9am | IFO – German Business Climate (Aug)
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