GBP Retail Sales in June bounced back to 13.9% growth, sounding outperforming the 8.3% expected. July Markit Manufacturing PMI estimate rose to 53.6, while the Services PMI improved to 56.6, both beating the forecasts, but with Brexit in the background Sterling only managed to gain around 60 pips on the Dollar. After the fifth round of talks failed last week, there are increased chances of a no-deal Brexit with EU chief negotiator Barnier stating that a deal by the end of the year seems “unlikely,” adding that they are “still too far away.” UK negotiator David Frost agreed on the sharp differences but believes that a deal is still possible. 

GBPUSD opens off the 4.5-month high but remains above 1.2800 as US dollar weakness outweighs no-deal Brexit fears and the government’s strong anti-China stance is increasing the risk of China economic retaliation. The UK won’t publish any economic data today.

USD

Tensions between the US and China heightened over the weekend after the arrest of a Chinese researcher who American authorities said had been hiding in the country’s San Francisco consulate. Washington has alleged the researcher is a member of the Chinese military.

Investors continue to unwind USD positions at the beginning of the week, dragging the USD to new 22-month lows across the board. Massive doses of stimulus by global central banks in order to counteract the impact of the pandemic and encouraging news suggesting a vaccine could be delivered in the medium-term plus positive results from key fundamentals supporting the idea of a strong recovery are all eclipsing data indicating that the pandemic not only remains unabated but it is also picking up pace once again in Europe and Asia.

In the US data space, Durable Goods Orders for the month of June are due later in the NA session seconded by the Dallas Federal Reserve Index.

EUR

The bullish tone around the common currency remains strong and is currently lifting the Euro to highs over the 1.17 mark against the Dollar and we begin a new trading week. With recent selling bias surrounding the Dollar, this has allowed the Euro to climb to highs not seen since September 2018. 

Data wise in Euroland, the key German IFO survey is due later seconded by the ECB’s M3 Money Supply and Private Sector Loans. 

Data to watch

12:30 - USD - Durable Goods Orders 

12:30 - USD - Core Durable Goods Orders