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UK On Track For July Re-opening

UK On Track For July Re-opening

BNP Paribas have named the British Pound as their top pick in a regular quarterly economic briefing, stating that the UK’s economy will likely outperform its peers and allow the Bank of England to raise interest rates in August 2022. Creating supportive forces for most if not all Pound pair valuations.

The Pound was also supported by comments from the UK Health Minister Matt Hancock, who said covid-related data looks encouraging and suggests lockdown can fully end on July 19 as planned because a recent rise in cases is not resulting in deaths.

It would normally be expected for the Bank of England to maintain an upbeat tone at Thursday’s meeting. However the difficulties surrounding a third wave of Covid suggests it’s too early to think about pushing forward the first interest rate hike. In spite of the high vaccination rate within the UK, the Delta variant cases are rising and the UK lockdown has been extended. Therefore it is felt likely that the Bank of England will keep interest rates on hold at 0.1% which should not have a major impact on Sterling as we move through the week.

From a rates point of view, GBP/USD started off yesterday around the 1.39 mark before falling and then picking back up to the 1.3950 at the US close. GBP/EUR traded within a tight range of 1.1650 and 1.17 with the EUR/USD pushing up to 1.1950 from daily lows of 1.1880. 

For today, the release of the flash PMIs for June from the US, EU and UK is one of the data highlights of the week. However, with the results expected to confirm that these economies are all on a positive course, the impact on their respective currencies is likely to be muted.

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