GB Pound
Sterling remains supported despite some selling pressure.
Movements
GBPUSD opened at 1.4118 and traded in a narrow range (1.4080-1.4180) to end the week relatively unchanged at 1.4097 (-0.15%).
GBPEUR opened at 1.1624 and moved with a negative bias during the first part of the week to reach 1.1570 early Thursday, before recouping all losses and closing unchanged at 1.1635.
Movement rationale
Whilst Sterling maintains its positive momentum, it did come under pressure last week amid concerns over rising COVID cases in UK linked to the Delta variant, which has delayed the government plan to fully reopen from lockdown. Additionally, an escalation in tensions between Britain and the EU over trade rules for Northern Ireland, with both sides still failing to agree solutions to resolve post-Brexit trade, negatively impacted on the currency. On Friday, the Office for National Statistics (ONS) published some mixed April data, with manufacturing output dropping unexpectedly by 0.3%, while the wider economy expanded by 2.3%, better than the median estimate of 2.2%.
Week ahead
The week ahead has a following UK economic calendar:
Calendar
Tuesday 7am | ILO Unemployment Rate (Apr)
Wednesday 7am | Consumer Price Index (May), Retail Price Index (May)
Friday 7am | Retail Sales (May)
US Dollar
The US Dollar had a calm week.
Movements
EURUSD began the week at 1.2146 and showed little volatility until Friday, when it depreciated from 1.2190 to 1.2090 and finally closed with a fall of 0.25% at 1.2116.
GBPUSD opened at 1.4118 and traded in a narrow range (1.4080-1.4180) to end the week relatively unchanged at 1.4097 (-0.15%).
Movement rationale
It was a quiet week for the Dollar, with little movements for most of the week as the market was in wait-and-see mode, with all eyes on Thursday’s US inflation figures. Somewhat surprisingly, when the data came out, with a 5% year-on-year increase for May, the biggest jump in nearly 13 years, there was little market reaction as traders seem to remain convinced that the inflation spike will be temporary and not drive interest rates higher any time soon. In the labour report, published the same day, data shows a fall for six straight weeks in jobless claims, another positive sign of a strong economy recovery.
Week ahead
In the US the focus will be on the Federal Reserve meeting, with the economic calendar including the following:
Calendar
Tuesday 1:30pm | Retail Sales (May)
Wednesday 7pm | Fed Interest Rate Decision
Thursday 1:30pm | Philadelphia Fed Manufacturing Survey (Jun), Initial Jobless Claims (Jun 11)
Euro
The Euro was quiet.
Movements
EURUSD began the week at 1.2146 and showed little volatility until Friday, when it depreciated from 1.2190 to 1.2090 and finally closed with a fall of 0.25% at 1.2116.
GBPEUR opened at 1.1624 and moved with a negative bias during the first part of the week to reach 1.1570 early Thursday, before recouping all losses and closing unchanged at 1.1635.
Movement rationale
Despite a busy economic agenda in the Euro-zone area, the single currency remained relatively calm. A good gauge is EUR/USD implied volatility over a six-month horizon, which currently sits at its lowest since early March 2020. Some mixed data was released during the week, with German Industrial Production unexpectedly falling in April, while the Euro area final GDP for Q1 was released yesterday and revised notably higher (-1.3% q/q vs expectations of -1.8% q/q). The key event was the ECB meeting on Thursday, which despite raising its growth and inflation projections, delivered an overall dovish speech, pledging a steady flow of stimulus over the summer. However, the EUR reaction was muted, closing the week with little movements against its peers.
Week ahead
The Eurozone economic data calendar includes the following:
Calendar
Monday 10am | Industrial Production (Apr)
Thursday 10am | Consumer Price Index (May)
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