GBP: Bank of England communications all the more important

EUR: Not much of a recovery

USD: Weakens after mixed jobs report

Sterling

It is once again a week to watch the politics for sterling as the government inches towards a plan to announce further reopening of the UK economy. Cases of the Delta variant continue to increase although the vaccination program does seem to have broken the linkage between people catching the virus and needing hospital treatment to overcome it.

Following Governor Bailey’s slightly more dovish turns in front of a microphone last week we will continue to watch speeches by Bank of England members to see whether they continue to push against market expectations of a rate hike in 2022, something that would add further pressure on the pound.

Euro

The single currency has been given a bit of a breather by the doubts posed by last week’s US jobs number, although we do not expect this to last. Wednesday’s German industrial production numbers are the key for the currency this week and a disappointment on Wednesday morning could be enough to send GBPEUR to the top of its recent range around the 1.1720 mark. 

USD

Friday’s payrolls announcement once again gave something for everyone; those looking for strength in the US economy pointed to the greater than expected number of jobs added in the month of June, those looking for weakness focused on the slightly higher unemployment rate.

It is the latter that got the attention of the USD and subsequently it slid off somewhat into the long, Independence Day weekend.

The release of the latest round of Fed minutes on Wednesday will likely provide the US dollar with the next opportunity for strength as these are the notes from the meeting that saw the language on policy tightening switch and prompt this bout of USD outperformance. 

Elsewhere

Last week’s focus on oil prices will continue into this week as OPEC+ continue to try to put together a deal on oil supply. Should a deal not be forthcoming then we would expect a spike in the price of crude and gains for NOK, CAD and possibly the USD too.

Market rates

Today’s interbank rates at 08:23 against sterling. Movement vs yesterday.

Euro	€1.167 ↑
US dollar	$1.383 ↑
Australian dollar	$1.839  ↑
South African rand	R19.73  ↓
Japanese yen	¥153.6 ↓

Have a great day everyone.