IFX Market Report: Wednesday 21st July 2021

Sterling is weaker this morning as COVID-19 Delta cases continue to rise in the UK. The latest data from Public Health England “show that numbers of the Delta variant in the UK have risen by 33,630 since last week to a total of 75,953, a 79% increase. The most recent data show 99% of sequenced and genotyped cases across the country are the Delta variant”. The data also showed that “there was a higher risk of hospital admission for patients with the Delta variant compared with the Alpha variant”. The latest variant technical briefing noted that “as of 14 June a total of 806 people had been admitted to hospital with the Delta variant of the virus – an increase of 423 since last week”. The present ‘risk-off’ sentiment in the market will likely continue unless cases show a dramatic decrease. Thus, the demand for safe-haven assets, such as the US Dollar and Swiss Franc, will increase if cases continue to rise.

As investors turned to less riskier currencies yesterday, the Greenback was able to proceed with its recent impressive run. The market environment has supported the US Dollar Index (DXY) as it currently trades just above $93, less than 0.3% lower than the yearly high. There are also rumours that the Federal Reserve may announce their intentions to taper its current bond purchasing. This is turn would be Dollar positive, keeping the demand for the currency strong. The consensus is that if the Fed do announce this move, it will be at the Jackson Hole Symposium, due to take place 26th – 28th August.

Dollar strength yesterday put increasing pressure on Cable, pushing it closer to the 1.35 territory. GBPUSD started the session at 1.3662 but closed at 1.3610.

GBPEUR marked its fifth consecutive day of losses yesterday as the pair fell even further in the session. Opening at 1.1594 the pair was unable to sustain that position as it fell to 1.1569, where it closed the day.

EURUSD finally showed some price-action yesterday as the Dollar strengthened. The pair opened at 1.1784 and closed at 1.1763.