Pound and Euro to move into the spotlight
The Dollar was the main focus for the markets last week as the Fed indicated that they will limit the amount of tightening for the rest of the year, consequently causing Dollar weakness across the board.
This week the focus will move away from the Greenback as we anticipate fresh data from both the UK and the Eurozone, bringing the Pound and the Euro to the forefront. The releases of the German ZEW and IFO Surveys on Tuesday followed by UK inflation and retail sales figures are bound to provide fresh stimulus to the European major currencies later in the week.
GBPUSD pushed daily highs of 1.4505 but reverted and stayed around 1.4480 throughout the day on Friday after a week of gains for Sterling. Nevertheless, Cable opens this morning below the 1.4400 threshold.
Today is a very quiet data day, with only the house price index being released for the UK. This is the earliest insight into the CPI inflation report that will be released tomorrow morning, but it is likely to have a muted impact on the market. The resignation of Ian Duncan-Smith from the cabinet may increase concerns linked to the ‘Brexit’, but the impact on the market is yet to be seen.
Friday was also quiet for the Eurozone. As a result the single currency had weakened against Dollar and Sterling as it was left exposed to risk appetite trends and a potential continuation of profit taking sentiment. GBPEUR opened Friday at 1.2793 and touched a daily high of 1.2863 before reversing during the US trading session. The pair opened this morning at 1.2820.
The Euro opened Friday at 1.1315 against the Dollar and lost ground throughout the day before opening this morning at 1.1263. With no data due for release today, expect any Euro volatility to come from the broader market risk sentiment.
The day ahead is devoid of any important news or reports from the major currency pairs.