GBP
Sterling lost ground once more last week, notching a fourth negative week in the last five, amid further dovish comments from the BoE, along with another dismal performance in global equity markets.
Cable closed below 1.21 on Friday, with further losses back towards the recent 1.1930 lows looking likely, while GBP/EUR also fell, amid a widening policy divergence between the cautious BoE, and increasingly aggressive ECB.
Looking ahead, this week’s UK data docket is a little lighter, highlighted by Tuesday’s PMI data, set to show a further slowing in economic activity, in addition to broadening price pressures.
EUR
The common currency also had a poor week last week, re-testing important long-run support at 1.0340, before bouncing modestly as the week drew to a close.
These declines came despite growing speculation that the ECB will plump for a 50bps hike in a few weeks, owing to another record high inflation print in June.
This week’s calendar is something of a subdued one in the eurozone, besides the latest PMI data, though remarks from ECB speakers will be closely watched as the market continues to second-guess how hawkish the Governing Council will be later this month.
USD
The greenback benefited from solid month-end demand last week, rallying strongly into the end of June, taking the DXY north of 105 once more, back towards the 20-year highs seen early last month.
Supportive flows are unlikely to provide the foundations for a prolonged rally, however, especially with money markets already moving to price almost 50bps of Fed rate cuts during the course of 2023.
This week, there are two main events; minutes from the June FOMC meeting should, on Wednesday, confirm another 75bps hike for later this month, while Friday’s labour market data should show another month of relatively solid jobs growth.
Data Releases
| Date | Region | Release | Previous | Consensus |
| Tuesday 5th July | AU | RBA Interest Rate Decision | ||
| Wednesday 6th July | US | JOLTS Job Openings | 11.4m | 10.85m |
| Wednesday 6th July | US | FOMC Meeting Minutes | ||
| Friday 8th July | US | Average Hourly Earnings m/m | 0.30% | 0.30% |
| Friday 8th July | US | Non-Farm Employment Change | 390k | 275k |
World News
Fears of recessions are increasing throughout the world’s key economies with financial markets bracing for impact. Major economies including the EU, US and Australia are expecting to fall into a recession within the next 12 months due to the cost-of-living crisis and tightening of government policies which will push global economies into a growth slowdown.
The G7 are drafting ideas to place a price cap on Russian oil to squeeze Russia’s ability to continue to fund its war in Ukraine, and to try to control the surge in energy prices and protect consumers. The G7 continues to find challenges in this, as analysts remain sceptical about the integrity of the proposal. The Kremlin has warned that any attempt to impose a price cap will cause more harm than good.
| Share Index | Prev. Close | Open |
| FTSE100 | 7168.65 | 7168.65 |
| DAX | 12783.77 | 12627.66 |
| CAC40 | 5931.06 | 5983.98 |