Sterling below 1.39 against the Dollar
Sterling benefited from speculation that the Bank of England could next week deliver a slightly more hawkish (raising interest rates) monetary policy stance. The Bank’s chief economist Andy Haldane stated that the economy may be near pre-covid output levels but there was little market impact given his consistently hawkish messages over the past few weeks.
Risk appetite held relatively firm, global equities suffered limited losses and the Euro retreated to near 1.1710. There was some unease as UK covid infection rates are now higher than the Eurozone again, but there were also reports that lockdown easing in England could be brought forward to July 5th if hospitalisation rates remain very low. Sterling fell to 1-month lows, just below 1.3900, versus a strong Dollar.
Sterling opens just below 1.3900 against a strong Dollar and 1.1675 to the Euro following weaker than expected UK retail sales data.
The Euro Against the Dollar is the lowest since mid-April, failed to conquer the 1.1900 threshold. The pair sellers stepped back afterwards as the US dollar consolidated recent gains amid a sluggish session and mildly optimistic markets.
The cautious optimism of the markets could be the chatter relating to US President Joe Biden’s infrastructure spending plan and a three-month low of US inflation expectations. As per that latest 10-year breakeven inflation rate data from the St. Louis Federal Reserve (FRED), inflation expectations are the lowest since March.
The Euro currently flirts near yesterday’s low of 1.1890 against the Dollar heading into Friday’s European session.
The currency pair dropped to the lowest since mid-April in taking out the key psychological level of 1.1900. Euro sellers seemed to step back heading late into the US session amid consolidation after recent gains but in early Europe the single currency sell off seems to have picked up pace as we begin the last trading session of the week.
Data to watch
07:00 – GBP – Retail Sales