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Weekly Update: Pound Slumps on Underwhelming Data, Euro Surges to One-Year High

The Pound tumbled this week, relinquishing most of the gains it made through the first part of July as UK economic data failed to impress investors.

The Euro, meanwhile, enjoyed considerable support this week in the run up to a key EU summit to discuss the EU’s coronavirus recovery fund.


Pound Sterling Slumps on Disappointing Data

GBP/EUR – Down one cent on the week’s opening levels

GBP/USD – Down one cent on the week’s opening levels

The Pound fell back this week as a weaker-than-expected monthly GDP reading from the UK headlined some underwhelming economic data.

Further limiting Sterling’s appeal was lingering Brexit uncertainty as the UK and EU remain deadlocked over the terms of a future trade agreement.

Coming up next week, the focus for GBP investors looks to be on the UK’s latest PMI figures. Will a return to growth for the UK’s private sector help to buoy the Pound?


Euro Soars to One-Year High

EUR/GBP – Up one pence on the week’s opening levels

EUR/USD – Up one cent on the week’s opening levels

The Euro enjoyed considerable support over the past week, even surging to a new one-year high against the US Dollar in the process.

This came as the European Central Bank (ECB) kept its monetary policy unchanged ahead of a critical EU summit to discuss the EU’s coronavirus recovery fund.

This summit is set to go on into the weekend and is likely to influence the Euro next week depending on the result, with EUR investors likely to cheer any progress towards an agreement.


US Dollar Stumbles in Upbeat Trade

USD/GBP – Down one pence on the week’s opening levels

USD/EUR – Unchanged on the week’s opening levels

The US Dollar was on the back foot through the majority of this week’s session, with demand for the safe-haven currency being undermined by positive headlines regarding a potential coronavirus vaccine.

However, the US Dollar started to recoup some of these losses towards the end of the session as renewed US-China tensions soured the risk tone.

In the absence of any notable US data releases, USD exchange rates are likely to remain highly sensitive to market sentiment next week, potentially leading to additional losses if the mood remains largely upbeat.


Australian Dollar Firms in Risk-On Trade

AUD/GBP – Unchanged on the week’s opening levels

AUD/USD – Up one cent on the week’s opening levels

The Australian Dollar maintained an upward trajectory through this week’s session as rising market optimism saw investors go risk-on.

Also supporting the ‘Aussie’ was some positive data from China, with stronger-than-expected Chinese trade figures reflecting well on AUD exchange rates.

In the week ahead, the focus for AUD investors is likely to be on the minutes from the Reserve Bank of Australia’s (RBA) latest policy meeting, with a cautious outlook from the bank potentially trimming demand for the ‘Aussie’.


Key Data

Jul 21 AUD RBA Minutes

Jul 21 GBP Public Sector Borrowing (Jun)

Jul 22 USD Existing Home Sales (Jun)

Jul 23 GBP CBI Industrial Orders (Jul)

Jul 23 USD Initial Jobless Claims (18/Jul)

Jul 23 EUR Consumer Confidence (Jul)

Jul 24 GBP Retail Sales (Jun)

Jul 24 EUR Manufacturing PMI (Jul)

Jul 24 EUR Services PMI (Jul)

Jul 24 GBP Manufacturing PMI (Jul)

Jul 24 GBP Services PMI (Jul)

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