GBP
Friday started with the Pound under pressure following President Trump’s negative comments adding to Brexit comments. Bank of England Deputy Governor Jon Cunliffe blamed poor weather for weak first-quarter activity and added that the economy is expanding around or a little above its potential growth rate. Cunliffe also expressed some caution surrounding the rate of wages growth and wanted a little more evidence that the supply side is evolving as expected. Although Cunliffe is known to be dovish, Tuesday’s inflation and wages data could be decisive for several MPC votes.
President Trump hinted at trade talks with the UK, which helped underpin sentiment, and short covering helped Sterling to rally back above 1.3200 against the Dollar. CFTC data recorded a 10-month high in bets that sterling would fall, maintaining the potential for short covering if sentiment shifts.
Data from Visa recorded that real consumer spending increased 0.7% in the year to June. The Pound opens at 1.3250 against the Dollar and the Euro around 1.1330.
EUR
The Euro remained under pressure ahead of Friday’s New York open and dipped to lows just above 1.1610 against the Dollar as strong US headway against Sterling spilled over into a wider US advance against European currencies.
The Euro was down 0.3%, losing for the fourth day in a row due to a lack of meaningful data out of the Eurozone and speculative positions. The European Central Bank (ECB) has pretty much set all expectations, signalling no change in current monetary stance until at least next summer.
The Euro should also be resilient given the decline in Euro long positions to the lowest level since May 2017. Narrow ranges prevailed on Monday with the Dollar unable to make fresh headway ahead of domestic retail sales data later in the session, while the Euro crept to just above the 1.1700 level.
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