Pound Sterling

Pound (GBP) Sinks Ahead of Thursday’s Bank of England Interest Rate Decision

Pound News: GBP Struggles as UK Services PMI Falls Below Forecasts in July 

The Pound (GBP) struggled against the major currencies today after the latest UK services PMI for July fell below forecasts from June’s 62.4 to 59.6. As a result, GBP investors have become more concerned about the outlook for the nation’s largest sector. 

In a relatively quiet week for UK economic data, Pound investors have instead looked ahead to Thursday’s interest rate decision from the Bank of England (BoE). 

Although the bank is widely expected to hold interest rates at 0.1%, analysts and economists have warned that inflationary pressures could test the central bank’s patience. 

However, could a hawkish monetary policy statement drive-up investor demand for Sterling this week? 

Euro News: EUR Fluctuates Despite Weaker-Than-Expected Eurozone Composite PMI 

The Euro (EUR) rose slightly today despite Eurozone retail sales growth slowing slightly in June. According to the latest data, the year-on-year figure rose by 5%, but month-on-month the figure fell below consensus from 4.1% to 1.5%.  

The latest Eurozone composite PMI for July was also revised down from 60.6 to 60.2, sparking concerns for the bloc’s economic strength in the coming months. 

Looking ahead, Euro traders will eye tomorrow’s German factory orders data for June along with the European Central Bank’s (ECB) latest economic bulletin.  

If the outlook improves for the Eurozone’s largest economy, then the single currency would head higher against the major currencies.  

US Dollar News: USD Edges Higher on Souring Risk Sentiment 

The US Dollar (USD) initially benefited from souring risk sentiment today as concerns over the spread of the coronavirus throughout China spurred demand for the safe-haven currency. 

Today also saw the release of the latest ADP employment change data for July, which fell well below forecasts from 680,000 to 330,000 and stifled the US Dollar gains. 

US jobless claims data, due out on Thursday, will remain in focus for US Dollar traders this week. 

Any signs of improving levels of employment could see the US Dollar exchange rate head higher. 

Risk sentiment will also remain a key influence on the ‘Greenback’. Could increasing Covid-19 cases in Asia dampen risk sentiment and drive-up demand for the USD? 

Canadian Dollar News: Falling Oil Prices Limit Commodity-Linked ‘Loonie’ 

Demand for the oil-sensitive Canadian Dollar slipped this week as growing concerns over the spread of Covid-19 throughout China has dented risk sentiment and investment in oil. 

In the absence of any influential Canadian economic data, the ‘Loonie’ has remained effectively driven by concerns over weakening oil prices. 

Australian Dollar News: Positive Chinese PMI Data Uplifts ‘Aussie’ Demand 

The Australian Dollar (AUD) rose today following stronger-than-expected Chinese PMI data. With China being Australia’s largest trading partner, this has provided a boost to Australian economic optimism. 

However, with the spread of the Delta variant of Covid-19 throughout Asia and particularly China, ‘Aussie’ investors are also remaining cautious.  

Any deterioration in risk sentiment this week would see demand for the risk-averse ‘Aussie’ quickly slide. 

Upcoming Data 

02:30 AU Retail Sales (Jun) 

09:30 UK Services PMI (Jul) 

09:00 EU PMI Composite (Jul) 

10:00 EU Retail Sales (Jul) 

13:15 US ADP Employment Change (Jul) 

15:00 US ISM Services PMI (Jul)