GBP/EUR reaching 16-week highs
BoE meeting ahead
The Pound had a positive week last week, supported by improving risk sentiment, falling Covid cases, and anticipation for the Bank of England's announcement this week. Thursday will see the central bank announce its latest interest rate decision, and while expectations are for monetary policy to remain on hold, some are hoping for a change in language from the central bank. The monetary policy meeting minutes will also be released and will be closely examined by market participants. BoE representative Ben Broadbent will also speak this week and could influence the way the Pound trades.
GBP/EUR reaching 16-week highs
Last week, the Pound to Euro exchange rate closed around 0.23% higher but reached 16-week highs during the week. This morning, Eurozone data showed manufacturing numbers printed more positively than expected. Later in the week, retail figures will be out, as well as the European Central Bank's latest Economic Bulletin. It's a relatively quiet week for Eurozone ecostats, meaning the Euro could be more sensitive to the data releases that occur and to geopolitical developments.
Cable hits five-week highs
Last week, the Pound to US Dollar exchange rate had its best-performing week since February, closing 1.12% higher and reaching five-week highs. Today, highly influential US manufacturing data will reach the market, before Friday's slew of high-tier US labour market data. Investors will be paying close attention to the latest US Non-Farm Payrolls stat, as well as the Unemployment Rate and Average Hourly Earnings numbers. The labour market is one of the areas the Federal Reserve will be watching during its monetary policy deliberations.
AUD and NZD
RBA in focus
The Pound to New Zealand Dollar closed 1.16% higher and reached its most substantial level since August 2020, while the Pound to Aussie Dollar exchange rate closed higher for the fifth week in a row, reaching its most prominent levels since May 2020 and closing 1.16% higher. Today, Australia released its final July Markit Manufacturing Purchasing Managers' Index, which indicates how well the sector is performing. A figure over 50.0 denotes growth, whereas below indicates contraction. The July reading slipped from the previous 58.6 to 56.9, showing a decline in activity. The rest of the week has a number of significant data points due for release, which could influence the way the Trans-Tasman currencies trade. Tuesday will see Australian housing data released, followed by the Reserve Bank of Australia's latest interest rate decision.
Meanwhile, in New Zealand, the latest labour market data will print, expected to show a decline in unemployment. Australian services stats will follow later in the week, along with a speech from RBA Governor Philip Lowe and the central bank's statement on monetary policy. Additionally, data from Australia and New Zealand's largest trading partner, China, will be out and could influence the way the Aussie and Kiwi trade.
Influential data ahead
The Pound to Canadian Dollar exchange rate closed just 0.32% higher last week, despite climbing as much as 1.2% in the middle of the week. Last week, Canadian inflation slipped slightly below forecasts, from 3.6% to 3.1%, a shade under the 3.2% expectation. Inflation is one of the data points firmly in focus at the moment as markets try to gauge when central banks may act in adjusting monetary policy and hiking interest rates. In the week ahead, medium-tier Canadian manufacturing and building numbers will be released, followed by highly influential trade balance and labour market stats at the end of the week. The Canadian unemployment number is forecast to sink slightly lower in July, and a positive print in employment numbers could boost the Loonie against other currency majors.