Weekly Review – 15th July

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GBP

A really strong week for GBP, which has now hit a yearly high vs the USD (1.2980) and the EUR (1.1910). Meanwhile the Office for National Statistics, revealed that output is rising in the UK at the fastest pace for two years with GDP posting 0.4% growth in May. Stronger economic growth forecasts have temporarily chased the likelihood of interest rates cuts away.  The strength in GBP was also supported by softer than expected US inflation. According to market pricing, the likelihood of an August interest rate cut for the UK, has dropped to 50%. There is also still some expectation that inflation could rise towards the end of the year, necessitating more caution.

USD

Early on last week, US softened to 3% for June, Following these readings, the USD came under heavy selling pressure as expectations increased that the FED could start to reduce interest rates from September. However, the attack on US Presidential candidate Donald Trump on Sunday – raises the level of political uncertainty and in contrast, allowed the USD to benefit from some ‘safe haven’ inflow.

EUR

France’s recent election may serve to keep the EUR on the backfoot, as fears of French political instability sour sentiment. While Marine Le Pen’s far-right National Rally finished in third place, behind the French centrist coalition and an alliance of left-wing parties – investors were seemingly relieved that the nationalist and ‘unsustainable’ fiscal policies had not taken precedent amongst French voters. However, concerns of a hung parliament may continue to deter investor interest as a sense of political instability lingers. The Euro will be in focus on Thursday at midday when the European Central Bank makes its latest policy decision.

This week’s data

16th July

US Retail sales MoM

17th July

UK Inflation Rate YoY

EU Inflation Rate YoY

US Building Permits Prel

18th July

UK Employment Change

EU ECB Interest Rate Decision & Press Conference

 

For more information contact Jack Entwistle – j.entwistle@aureusfx.com 07961777463 or visit www.aureusfx.com

 

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