Pound Sterling

GBP Heads Higher as UK Covid-19 Infections Fall for Seventh Day in a Row

Pound News: Sterling Benefits as UK Opens Doors to Double-Vaccinated Europeans and Americans 

The Pound (GBP) remained strong today rising to its highest rate against the Euro since April, following news that the UK would open its doors to double-vaccinated tourists from the European Union (EU) and the United States.  

As a result, demand for Sterling has risen on renewed hopes that the UK economy is now on the road to recovery, with daily cases of Covid-19 infections falling for their seventh day in a row.  

Pound investors have become more cautious, however, with fears that new data could reveal rising Covid-19 infections and hospitalisations following the easing of lockdown restrictions on 19 July.  

Looking ahead, we could see Sterling fall if the outlook for the UK’s Covid-19 situation deteriorates, as this would hold back the nation’s economic recovery.  

Euro News: EUR Strengthens as EU Meets Covid-19 Vaccine Target 

The Euro (EUR) rose today following the news that the EU had hit its Covid-19 vaccination target. Ursula von der Leyen, the European Commission president, said that 70% of adults in the EU had now received at least one dose of the coronavirus vaccine.  

von der Leyen said in a statement:  

‘The EU has kept its word and delivered. Our target was to protect 70% of adults in the European Union with at least one vaccination in July. Today we have achieved this target.’ 

In Eurozone economic data, today saw the release of August’s German consumer confidence survey, which remained at -0.3, undershooting forecasts of an increase to 1.  

Nevertheless, the GfK report said that consumers ‘continue to view the German economy as being on the upswing’.  

Any further signs of an upswing to the Eurozone economy would see the Euro head higher against the major currencies this week. 

US Dollar News: USD Suffers as US 10-Year Yields Slide 

The US Dollar (USD) suffered today following the drop in the US 10-year yield from 1.28% to 1.25%.  

Jamie Fahy, the global macro strategist at Citi, commented on the yields:  

‘Even though the underlying growth backdrop is very strong, the market has moved from thinking about reflation to maybe a little bit of stagflation fear.’ 

Meanwhile, US Dollar investors are awaiting today’s interest rate decision from the Federal Reserve, which is expected to remain at 0.25%.  

A dovish Fed, however, could dampen risk sentiment and drive-up demand for the safe-haven ‘Greenback’.  

Could downbeat monetary policy for the world’s largest economy further sour risk sentiment later this evening? If so, we would see the US Dollar exchange rate begin to claw back some of this week’s losses.  

Canadian Dollar News: Dip in Oil Prices Weigh on ‘Loonie’ 

The Canadian Dollar continued to struggle this week following a further dip in oil prices. This has limited the appeal of the commodity-correlated ‘Loonie’, as oil market mood remains largely uncertain.  

In Canadian economic news, today saw the latest Bank of Canada (BoC) consumer price index figure rose by 2.7% in June year-on-year.  

As a result, some Canadian Dollar traders have become more optimistic about the outlook for the Canadian economy, despite worries about the healthiness of global economic trade and dipping oil prices.  

Australian Dollar News: AUD Struggles on Sydney’s Extended Lockdown Period 

The Australian Dollar (AUD) suffered from extension of lockdown measures in Sydney, Australia’s most heavily populated city. Australian inflation, however, jumped by 3.8%, sparking a degree of confidence in the steady recovery of the domestic economy.  

Upcoming Data 

07:00 EUR German GfK Consumer Confidence Survey (Aug) 

13:30 CAD BoC Consumer Price Index (Jun) 

19:00 USD Fed Interest Rate Decision