Last week, the Pound hit its lowest levels since April 2017 against the US Dollar (GBP/USD) as Brexit dominated Sterling once again. Meanwhile, against the Euro (GBP/EUR), the Pound registered its lowest July level on record since the single currency's inception in 1998. With Boris Johnson and Jeremy Hunt seemingly on course to attempt a no-deal Brexit, the Pound has been the main casualty, slipping lower on the uncertainty. By the end of the week, Sterling had managed to recover some ground against the Euro and US Dollar as MPs moved to block a no-deal Brexit. Politics will likely determine a lot of the Pound's movement in the week ahead with a new British Prime Minister due to be announced. Not only this, there's the possibility of a no-confidence motion in the government which could create more GBP volatility.
Towards the end of last week, the Euro fell against the Pound (EUR/GBP) as UK data printed positively. The European Central Bank (ECB) will reveal its monetary policy stance on Thursday amid calls for more stimulus to support the economy. While it's expected action won't be taken quite yet, forward guidance over the potential for a rate cut and other measures in coming months could dampen the Euro. The Euro to US Dollar (EUR/USD) exchange rate hit two-year lows in May, and has room to test these levels again should more weak economic data be revealed, or extra stimulus measures introduced. This week several ecostats detailing manufacturing, services, and consumer confidence levels will be released which may impact the EUR exchange rate.
Renewed trade concerns between the US and China came into focus last week after President Trump suggested that there was a long path ahead in terms of reaching an agreement with China, and hinted that tariffs could come back into play if he wanted. These ongoing trade tensions have affected economic growth, and this Friday, US data is expected to show a decline in growth, down from 3.1% to around 1.8%. A reading like this could create new thoughts on the conversation around the current levels of US interest rates, which are expected to be cut this month, and close attention will be paid to the Federal Reserve's words in upcoming meetings.
The Australian Dollar managed to register some gains against the Pound last week after economic data showed that the Reserve Bank of Australia (RBA) might not need to cut interest rates again imminently. This week will see the release of Australian manufacturing and services data, which may impact the Australian Dollar. In the early hours of Thursday morning, RBA Governor Phillip Lowe will give a speech in Sydney which may also affect the way the Aussie trades.
The New Zealand Dollar was offered some support last week when inflation data met expectations, limiting the likelihood of another immediate rate cut. It's a quiet week ahead for New Zealand data, with only trade balance stats due out on Tuesday. This means the Kiwi Dollar will be susceptible to other developments elsewhere and general risk appetite.
Last week showed Canadian inflation levels had fallen from seven-month highs due to a decline in gasoline prices. This ebb lower in prices should offer Bank of Canada (BoC) policymakers some support to hold interest rates at current levels, despite a lot of other major economies making cuts. The Canadian Dollar edged lower on the inflation reading and was weakened further against the Pound and US Dollar after Friday's revelation that Canadian Retail Sales had noted a surprise contraction in May. It's an incredibly quiet week for Canadian data too, with only low-tier Wholesale Trade Sales and Business Barometer stats due for release. With no significant domestic data to drive it, the Canadian Dollar will likely be sensitive to other geopolitical developments and oil price fluctuations.