Top Currency Pairs Monday 11th July 9:00 UTC GBP/USD: 1.19668 (Last Week: 1.21217) EUR/USD: 1.01222 (Last Week: 1.04374) GBP/EUR: 1.18223 (Last Week: 1.16137)
Pound Sterling Last week, Boris Johnson announced his resignation as Prime Minister, following a number of resignations from ministers and aides. The Pound saw its strongest rally in weeks as the confusion and uncertainty over his future was made much clearer. The new leadership race is boosting the Pound, with the hope that a new leader can rebuild trust in the government as well as set out a new economic approach to assist households across the country. Looking ahead, the Pound Sterling strength could continue in what will be a data-light environment over the coming week, but may waver if Wednesday's 3-month GDP update for May dips into negative territory. Andrew Bailey is also set to speak on Tuesday which will give the markets some indication on the Bank of England's stance.
Euro The Euro is currently experiencing weakness amid an ongoing energy crisis. European currencies are testing multi-year lows against the Dollar as investors react to surging energy prices. This came after news of supply constraints from Norway, where gas workers are on strike in Europe's second-largest energy supplier after Russia. The Norwegian government intervened to avoid a full-blown crisis. Meanwhile, Russia ceased gas flows through the Yamal pipeline placing a huge strain on the Eurozone. European energy ministers will attend a meeting later this month to agree on a plan for the energy market. Inflation figures for a number of European countries are due on Wednesday, and if they are all pointing higher it may put pressure on the European Central Bank to act aggressively at the next meeting.
U.S. Dollar The US Dollar strengthened last week on robust employment data, with expected jobs print fueling expectations of further interest rate hikes from the Federal Reserve. The non-farm payrolls report showed employers hired 372,000 new workers in June, with unemployment at 3.6%. Combining this with external factors affecting Europe, and the US Dollar's safe-haven status, the EUR/USD exchange rate has fallen to levels not seen since pre-2010. Looking ahead, Wednesday will see US inflation figures released. Developments in China will also be closely monitored as news of districts undergoing mass testing for a new Covid outbreak may lead to tough imposed restrictions once again.
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