The Pound finished last week slightly lower as UK coronavirus restrictions tightened. It's estimated more than a quarter of UK residents are in area-specific lockdowns while the increase in cases has hit record highs. With the rise in cases and localised lockdowns, concerns over the state of the economy rose, creating less Sterling demand, while safe-havens like the Dollar gained in popularity. Today, the British currency has jumped higher as positivity in Brexit talks and pushback over the possibility of negative interest rates nudged the currency higher. Sterling's reached interbank levels of 1.2929 against the US Dollar, and 1.1080 versus the Euro. Brexit talks have recommenced this week, meaning the Pound could be in for some further movement as the headlines roll out. In terms of data, mortgage stats and the final estimates on UK growth for the second quarter will be released on Tuesday and Wednesday respectively, with manufacturing stats released on Thursday.
Waiting on the data
Last week the Euro softened against other currency majors as an increase in coronavirus cases took place, which encouraged stricter lockdown rules in some areas. In the week ahead, markets will be watching comments from European Central Bank Chief Christine Lagarde following on from recent statements about further monetary stimulus. German inflation and retail figures will be out in the week ahead, as well as manufacturing data for all of the largest economies. Additionally, Eurozone unemployment numbers and inflation data will also be out—all of which could influence the Euro moderately.
The race for President
The Dollar has gained some favour as a safe-haven currency in recent sessions, and had its strongest performance in 25 weeks last week, climbing by almost 2.0% against a basket of other majors. Markets will be eyeing the upcoming election and any indications of who could be the President in 2021, but recent events suggest USD could remain stable and a favoured safe-haven in the near future. Employment, confidence, and manufacturing data will be out in the week ahead, which could give the US Dollar significant opportunities to move.
AUD and NZD
Falling versus Sterling
The Australian Dollar traded at two-month lows against the US Dollar last week, while falling by around 3.0% versus the Pound. Meanwhile, the New Zealand Dollar sank by around 2.5% against Sterling. In the week ahead, New Zealand building and confidence data will be out which could offer the Kiwi some moderate opportunity to move. Meanwhile, Australian manufacturing, services, and retail stats will also be out and could create some market movement.
The Canadian Dollar hit a seven-week low last week, before rebounding in later sessions as oil prices increased. Growth data due out this week could influence the Canadian Dollar, especially if it falls in line with forecasts for a reading of 3.0% in July, after June's 6.5%. If a better-than-forecast reading comes to light, it could curry some CAD favour with investors. However, if a worse reading appears, dragging down expectations for the economic rebound with it, Bank of Canada policymakers could be under more pressure. Building and manufacturing data will also be out in the week ahead and could influence the Loonie.