IFX Market Report: Tuesday 27th July 2021

As COVID-19 cases in the United Kingdom continue to fall, the Pound is benefitting from a less ‘risk-off’ market environment. Sterling was able to make advances on both the Euro and US Dollar on Monday, claiming 1.17 against the Single-Currency and 1.38 against the Greenback. While the latest infection rates are rejoiced by the government, many fear that cases are dropping due to a lack of testing. Sky News noted yesterday that “one reason that cases could be falling is the start of school holidays in England, as children are often asymptomatic and are not required to get daily tests outside of term time”. Another reason for falling infection rates could be the number of people in self-isolation, which controversially exceeded over 600K earlier in the month. It has been recognized that while “the ongoing coverage of the so-called ‘pingdemic’” has been presented in a negative light, the figures “reflect the fact that, in response to a large surge of infections, a great many people have been asked to self-isolate recently and this could have a direct impact upon transmission”.

The US Dollar is a touch softer this week as Dollar bulls brace themselves for the latest interest rate decision from the Federal Reserve. The US Dollar Index (DXY) retreated from its highest level last week, with the index dropping to $92.53. Jerome Powell and the Fed will kick off their meeting on Wednesday and give its decision on the same day. The consensus is that the US central bank will leave rates unchanged at the range of 0% and 0.25%.

Cable started the week trading at 1.3757 on Monday and was able to make significant upside moves as Dollar investors became increasingly weary about Wednesday. GBPUSD was able to finish the session at 1.3824.

GBPEUR also made gains yesterday, moving back into the familiar territory of 1.17. The pair started the session at 1.1676 and finished the day at 1.1707.

EURUSD also made the most of the Greenback’s misfortune. The pair opened at 1.1782 and closed at 1.1808.

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