Weekly Round-Up & The Week Ahead

Weekly round-up and a look at the week ahead for EUR, GBP, and USD.

DAILY ANALYSIS

GBP

Fresh concerns has seen the pound hit its worst streak this year as the GBPUSD rate fell back below the 1.35 mark. Whilst the decline is somewhat related to a wider dollar rebound in recent sessions, data released on Friday showed that the UK economy contracted for a second month hasn’t helped the pound too with a potential shift in market confidence now starting to emerge. UK GDP fell again, showing that the economy contracted by 0.1% on a month by month basis. This was in contrast to market expectations for an expansionary 0.1% reading and following on from a 0.3% month on month contraction previously. Recent movements in EURGBP is a good indicator of the pound’s current standing with EURGBP continuing to surge towards the .8700 territory (1.15 for GBPEUR).

With renewed focus on the UK economy, this week could be a big one for the pound with a number of key events scheduled. First up tomorrow, Bank of England Governor Andrew Baily is due to speak at 9pm. His views and comments will be closely watched as always although majority of market participants will be waiting for key inflation data due for release on Wednesday morning. The inflation rate is expected to remain unchanged at 3.4% with the core component also expected to remain unchanged at 3.5%. any deviation from this is likely to cause further moves in sterling. Thursday we get employment data including average earnings along with the latest unemployment rate.

USD

As mentioned above, the dollar has been experiencing a mini rebound in recent days which has continued into early trading this morning . However, this is in despite of US President Trump inconsistent messaging over tariff negotiations and markets showing increasing insensitivity to tariff threats from the US. Over the weekend President Donald Trump declared a 30% rate for the European Union and Mexico effective August 1st. Already this morning European equities are lower but unlike recent tariff announcements, the dollar isn’t feeling any repercussions.

Looking ahead to the rest of the week, the US also gets up to date inflation data with tomorrow’s release expected to show a rise in the annual inflation rate to 2.6% from 2.4% previously. Tomorrow afternoon also sees a flurry of Fed members giving various speeches.

EUR

EURUSD continued run seems to have run out of momentum for now with the diminishing prospects of a EUR-US trade agreement. EURUSD capped out last week above the 1.18 mark but seems to have run into some bearish pressures for now. Should EURUSD continue to trade below 1.17 then support at 1.1650 comes into play followed by 1.1560. However, any dip maybe relatively short lived as the single currency continues to make gains against many of its major peers like GBP and SEK.

Reasonably light week for eurozone economic releases with EUR expected to take its direction from US Dollar moves.

Daily Rates

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