Low confidence in Eurozone & UK Economy
The Euro was able to post gains to highs above 1.0450 as the dollar lost ground, but gradually surrendered gains as the US currency regained territory and US equity futures remained in negative territory. Trading volumes were inevitably subdued given the US Independence Day holiday.
Sterling edged higher in early Europe on Monday with a further element of short covering following the sharp recovery during Friday. Sterling advanced to highs around 1.2165 against the weaker dollar, but momentum faded quickly with a gradual retreat during the European session.
Overall confidence in the UK economy remained weak which continued to sap support for the currency. Markets also continued to fret over the Eurozone and global economic outlook which also sapped potential support for the currency and Sterling retreated to the 1.2100 area after the European close.
The Euro was held in relatively tight ranges and drifted lower to 1.1615 at the European close. The UK currency held just above 1.2100 against the dollar with markets monitoring comments from Bank of England officials during the day as well as UK political developments.