On the anniversary of Boris Johnson becoming Prime Minister, sterling has shown some resilience to finish the week holding above the 200-day moving average for a 3rd straight day.
However, the pound’s newfound vigour was somewhat dampened yesterday as the EU’s Chief Brexit negotiator, Michel Barnier, noted that the UK and EU are still very far away from breaking the deadlock over a new trade deal. Thus, it is clear that the reignition of unconstructive trade talks between the two will restrain any upside gains for GBP.
GBPUSD opened at 1.2716 and after a brief dip rose to a high of 1.2757 as Thursday’s session closed.
GBPEUR opened on the slide at 1.0990 and after a short-lived recovery in the afternoon closed at 1.0974.
Across the pond, US / China relations continue to be put under pressure as the two countries continue to exchange blows. In reaction to the US shutting down the Chinese consulate in Texas earlier this week; yesterday, the Chinese instructed the US to shut down its Chengdu consulate. While this hostility between the two superpowers is nothing new, it continues to put even more strain on an already weak USD.
This comes at a time when US labour market shows signs of stagnation, with Initial Jobless Claims posting their first week-on-week rise since March.
Unsurprisingly, the US Dollar index was down yesterday, hitting its lowest levels since March. It was the Greenback’s 5th consecutive day of losses. Given the Dollar’s status and historical performance – can this downward trend continue for much longer?
The EUR in contrast has had an impressive week as it continues to perform exceptionally against its peers after the news of the European Recovery Fund earlier in the week.
EURUSD opened at 1.1584 and continued to break out of current trading ranges, hitting a near 2-year high of 1.1626.
9AM this morning there was more positive news for the Eurozone, as PMI data for July shows a significant improvement from last month’s reading and beating it’s forecasted figures.
From the UK – Retail Sales bulldozed through expectations coming in at -1.6% (forecasted at -6.4%), contrary to last month’s abysmal -12.9% reading.
Similarly, it is the same case with the UK Flash PMI figures – beating expectations across the board at 9:30 this morning.