A worrying rise in global coronavirus cases, stoked demand for the safe-haven US Dollar this week, resulting in it being the top performer through the session.
At the same time, the Pound fluctuated this week, mostly as a result of some conflicting messages from the Bank of England (BoE).
Pound Rocked by Conflicting BoE Comments
GBP/EUR – Unchanged on the week’s opening levels
GBP/USD – Down one cent on the week’s opening levels
The Pound traded in a wide range this week, as some positive Brexit developments were countered by ongoing coronavirus concerns.
Infusing further volatility into Sterling were also some dovish comments from Bank of England Governor Andrew Bailey, which offset some hawkish comments by the BoE’s Andy Haldane earlier in the session,
The publication of the UK’s latest monthly GDP figures will be in focus next week, with the Pound likely to firm if the economy continued to grow at a robust pace in May.
Euro Slips as Europe Faces another Wave of Coronavirus Infections
EUR/GBP – Unchanged on the week’s opening levels
EUR/USD – Down one cent on the week’s opening levels
The Euro trended broadly lower this week, undermined by a modest drop in Eurozone inflation last month as well as concerns that Europe is facing another wave of coronavirus cases.
However, the Euro’s losses were tempered somewhat in the second half of the week, after the Eurozone’s latest manufacturing PMI beat expectations, printing at a record high in June.
Looking ahead, the Euro could face additional pressure next week as the latest ZEW surveys are expected to report that German economic sentiment deteriorated again in July.
US Dollar Underpinned by Souring Market Sentiment
USD/GBP – Unchanged on the week’s opening levels
USD/EUR – Up one cent on the week’s opening levels
The US Dollar opened this week on strong footing, with demand for the safe-haven currency being bolstered as investors were spooked by a growing number of new coronavirus outbreaks across the world.
However, the US Dollar’s gains were tempered at the end of the week, after a stronger-than-expected US payroll reading helped to revive market risk appetite.
Turning to next week’s session, the US Dollar could receive a boost if the US service sector reports another month of record growth in June.
Australian Dollar Undermined by Risk-Off Mood
AUD/GBP – Unchanged on the week’s opening levels
AUD/USD – Down one cent on the week’s opening levels
The Australian Dollar trended lower through this week’s session as skittish investors shied away from the risk-sensitive ‘Aussie’.
Further undermining AUD exchange rates were concerns over the spread of the Delta variant of the coronavirus throughout Australia.
Looking ahead, the Reserve Bank of Australia (RBA) will hold its latest policy meeting next week, with the Australian Dollar potentially facing additional headwinds if the RBA’s forward guidance disappoints.
Jul 05 EUR Services PMI (Jun)
Jul 05 GBP Services PMI (Jun)
Jul 06 AUD RBA Interest Rate Decision
Jul 06 EUR Retail Sales (May)
Jul 06 EUR ZEW Economic Sentiment (Jul)
Jul 06 USD ISM Non-Manufacturing PMI (Jun)
Jul 07 USD JOLTs Job Openings (May)
Jul 07 USD FOMC Minutes
Jul 09 GBP GDP (May)