2nd August - Weekly FX Update

GBP/EUR: Monday 9:00 UTC 2nd August: 1.17101

The GBPEUR exchange rate was trading at April highs last week, after the release of German unemployment and inflation data. German inflation was the highest since 2008, recorded at 3.8%. The ECB has supported its stance of transitory inflation, however soaring German figures will certainly prompt a debate about whether the ECB should start tapering its current stimulus measures. Despite dropping off slightly from a three-month high of 1.17639 last week, the Pound is still being underpinned by the reopening of the economy, and lower week on week Covid-19 cases. The most eagerly anticipated data release this week comes on Thursday as the BoE share its minutes and announces its monthly interest rate decision. As economic recovery ramps up, there is a growing debate as to whether bond-buying should begin to be tapered.

GBP/USD: Monday 9:00 UTC 2nd August: 1.39158

The Pound was at it's highest level in more than a month last Thursday. Positive market sentiment was fueled by decreasing Covid-19 cases. Despite a slight increase heading into the weekend, the Pound absorbed any concerns. Meanwhile, Fed minutes revealed that any notion of rate increases were far away, as stated by Fed Chair Jerome Powell in the July meeting of monetary policymakers. Similarly, this week the Bank of England will share minutes from its latest committee meeting, and will announce its monthly interest rate decision. With growing debate as to whether bond-buying could begin to be tapered, it will provide a very important insight into the direction the BoE are looking to take in the medium-long term.