IFX Market Report: Tuesday 13th July 2021

The British Pound traded rather flat on Monday as there were “little or no drivers during the session to push Sterling”. Last Friday’s US Dollar sell-off was enough to get Cable poised to test the 1.3900 handle, and Sterling yesterday showed strong resilience to maintain that threat throughout the Monday session. This morning however, Sterling recorded losses against both the Dollar and Euro as the Bank of England (BoE) released their latest FPC Meeting Minutes and Financial Stability Report. The BoE said in its Financial Stability Report that “the banking sector remains resilient” thus the “extraordinary guardrails on shareholder distributions are no longer necessary”. In light of this, the BoE has removed restrictions on bank dividends and share buybacks imposed as a result of the pandemic, “judging the sector to resilient enough to absorb any further COVID-19 shocks”. After the news was released, shares of many British banks spiked, and the FTSE 350 Banking Index climbed 1.2%. This decision from the BoE follows moves already made by the US Federal Reserve and the European Central Bank, which both relaxed their shareholder pay out limits in recent months.

After an impressive surge to close the week last Friday, GBPUSD started yesterday’s session well at 1.3888. As the day progressed, Cable was able to make subtle gains and edge closer to surpassing 1.3900. Unfortunately for the pair this was not to be so, and GBPUSD closed Monday at 1.3892.

GBPEUR remained uninspired on Monday, opening at 1.1703 and closing at 1.1707. This morning however, the pair has come under significant pressure and now trades below the 1.1700 handle.

EURUSD also had an uneventful session yesterday. The pair started at 1.1867 but closed just 1 pip below at 1.1866.

On the data front, German Inflation Rate YoY for June came out at 2.3% as forecasted. This afternoon investors turn their focus across the pond with Core Inflation Rate and Inflation Rate for June released at 13:30. Then at 19:00 the US will release its June Monthly Budget Statement.

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