• Audere Research

Weekly FX Outlook June 28th


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GB Pound


Sterling recovered some lost ground versus the Dollar.


Movements

GBPUSD opened at 1.3828 and had a strong start, initially recovering the previous week’s losses and reaching 1.40 level on Wednesday. It then gave back some of the weekly gains to close at 1.3928 (+0.72%).


GBPEUR opened at 1.1635 and traded higher during the first part of the week to touch an 11-week high on Wednesday (1.1720). The pair then reversed the movement, depreciating 0.8% in the following two sessions before closing at 1.1663 (+0.24%).


Movement rationale

After the heavy losses recorded in the previous week, Sterling showed signs of resilience and recovered some lost ground, helped in part by an improved market sentiment. Also, increased optimism among UK and EU officials around finding a solution to the dispute over Northern Ireland supported the UK currency. However, the recovery pattern for the GBP came to an end on Thursday, after the BoE released its statement from the latest Monetary Policy Committee. Whilst the central bank raised its inflation forecast, it insisted that the surge in prices will be temporary, pushing back on rate tightening in the near term. The dovish statement triggered a sharp slide of the pound, halving its weekly gains against rival currencies.

Week ahead

The UK economic data calendar includes the following:


Calendar

Wednesday 7am | Gross Domestic Product (Q1)

Thursday 9:30am | Markit Manufacturing PMI (Jun), BoE's Governor Bailey speech


US Dollar


The US Dollar gave back some of previous week’s gain.


Movements

EURUSD began the week at 1.1884 and mostly traded in a narrow range (1.1880-1.1960). It closed slightly higher (1.1941) for a gain of 0.48%.


GBPUSD opened at 1.3828 and had a strong start, initially recovering some previous week’s losses and briefly reaching 1.40 level on Wednesday. It then gave back some of the weekly gains to close at 1.3928 (+0.72%).


Movement rationale

The Greenback lost some momentum after the substantial gains registered in the previous week, slipping against major currencies as Fed speakers offered mixed views on whether a rise in inflation is likely to be sustained or not. In particular, some dovish comments from Fed officials, reassuring that the monetary support will continue for an extended period, boosted the market sentiment, and penalised the Dollar. The US currency attempted to recover some ground on Thursday, as US growth was confirmed expanding at a 6.4% annualised rate in the first quarter of the year. However, a disappointing reading in the US consumer spending triggered some further weakness in the currency on Friday.


Week ahead

In the US the focus will be on Friday job report, with the economic calendar including the following:


Calendar

Tuesday 3pm | Consumer Confidence (Jun)

Wednesday 1:15pm | ADP Employment Change (Jun)

Thursday 1:30pm | ISM Manufacturing PMI (Jun), Initial Jobless Claims (Jun 25)

Friday 1:30pm | Nonfarm Payrolls (Jun), Unemployment Rate (Jun)


Euro


The Euro was quiet.


Movements

EURUSD began the week at 1.1884 and mostly moved in a narrow range (1.1880-1.1960). It closed slightly higher (1.1941) for a gain of 0.48%.


GBPEUR opened at 1.1635 and traded higher during the first part of the week, to touch a 11-week high on Wednesday (1.1720). The pair then reversed the movement, depreciating 0.8% in the following two sessions before closing at 1.1663 (+0.24%).


Movement rationale

It was a relatively calm week for the Euro, regaining some investor confidence after being under pressure the previous week. Some positive economic data helped the single currency, with the Eurozone economy edging back towards pre-pandemic norms and German business sentiment recording its best level since April 2018.


Week ahead

The Eurozone economic data calendar includes the following:


Calendar

Tuesday 10am | Consumer Confidence (Jun), Business Climate (Jun)

Wednesday 10am | Consumer Price Index (Jun)

Thursday 10am | German Retail Sales (May), Unemployment Rate (May)



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