GB Pound
Sterling was under pressure.
Movements
GBPUSD opened at 1.3874 and after trading range-bound during the first part of the week, it started to depreciate to close near a 3-month low at 1.3726, for a weekly loss of 1.07%.
GBPEUR opened at 1.1686 and initially moved higher, touching a 6-week high at 1.1757 before giving back all gains and closing at 1.1645 (-0.35%).
Movement rationale
Sterling started the week moving broadly sideways as PM Johnson announced the lifting of England’s COVID restrictions from 19th July. The currency then appreciated on Wednesday, following the release of better-than-expected inflation data in June (0.5% increase against expectations of 0.2%). A hawkish speech from Michael Saunders, a member of the BoE committee, backing a tightening of the UK monetary policy, also provided some initial support on the Pound. However, the UK currency later started to edge lower versus rival currencies due to disappointing data, with UK employment marginally worse than expected, concerns over the Delta variant and a surge in UK covid cases weighing on GBP.
Week ahead
The UK economic data calendar includes the following:
Calendar
Friday 7am | GfK Consumer Confidence (Jul), Retail Sales (Jun), Markit Services PMI (Jul)
US Dollar
The Dollar rose against rival currencies.
Movements
EURUSD began the week at 1.1870 and sharply fell on Tuesday to reach a new 3-month low (1.1772). It finally closed at 1.1787 for a weekly loss of 0.7%.
GBPUSD opened at 1.3874 and after trading range-bound during the first part of the week, it started to depreciate to close near a 3-month low at 1.3726, for a weekly loss of 1.07%.
Movement rationale
The Dollar recorded another strong weekly gain against peer currencies, as a combination of strong data and deteriorating risk sentiment boosted demand for the Greenback. The USD reacted positively to US inflation data on Tuesday, which registered the biggest jump in 13 years (US CPI soared by 0.9% in June, almost double the market consensus). Although the Federal Reserve continues to play down inflation data, reiterating on Thursday that rising inflation is likely to be transitory and tapering is “still a way off”, further support for the US currency was offered by investors’ drift toward safety as rising Covid-19 infections loomed over the pandemic recovery. Furthermore, upbeat US retail sales data also kept the Dollar in demand on Friday.
Week ahead
The US economic calendar including the following:
Calendar
Thursday 1:30pm | Initial Jobless Claims (Jul 16)
Friday 2:45pm | Markit PMI Composite (Jul)
Euro
The Euro remains subdued.
Movements
EURUSD began the week at 1.1870 and sharply fell on Tuesday to reach a new 3-month low (1.1772). It finally closed at 1.1787 for a weekly loss of 0.7%.
GBPEUR opened at 1.1686 and initially moved higher, touching a 6-week high at 1.1757 before giving back all gains and closing at 1.1645 (-0.35%).
Movement rationale
The single currency continued to lose some ground against the Dollar, as growing signs of a slowdown in China and a rise in Covid-19 cases globally pushed investors away from risk currencies and toward safe-haven assets. Also, some negative data weighed on the Euro, with Euro-zone inflation slowing in June after a steady acceleration in the first part of the year, the bloc's trade surplus shrank in May due to a decline of exports and industrial production disappointing economists by falling by 1% in May.
Week ahead
The Eurozone economic data calendar includes the following:
Calendar
Thursday 12:45am | ECB Interest Rate Decision, Consumer Confidence (Jul)
Friday 9am | Markit PMI Composite (Jul)
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