5th July - Weekly FX Update

GBP/EUR: Monday 9:00 UTC 5th July: 1.16706

GBPEUR has opened trading this week above 1.165, and will likely push towards 1.17, a level which has proved difficult to consistently break over the past 2 weeks. The rate fluctuated a lot last week, as UK inflation fears cooled and European data improved, with Germany being the driving force. Covid-19 infections are continuing to rise in both the UK and Europe, however it seems to be affecting the EU a lot more as summer tourism to Southern Europe is virtually non-existent. Raul Martins, head of the Portuguese Hotels Association, has claimed that the recovery of tourism in Portugal has practically come to a halt. If data is supportive over the next few weeks, the GBPEUR could test yearly highs and head towards the 1.18 barrier.

GBP/USD: Monday 9:00 UTC 5th July: 1.38528

Last week, Band of England governor Andrew Bailey dismissed any notion of tightening monetary policies, suggesting any premature action could falter the current economic recovery. Despite cooling any inflation fears, these dovish comments drove the Pound to it's lowest level against the Dollar since mid-April, at a rate of 1.37409. Heading in to the weekend however, a slight uptick in U.S. unemployment figures helped the Pound to rebound slightly, and is now back trading above 1.38. Wednesday is very significant for the Dollar, as the Fed's meeting minutes may provide some indication as to whether asset purchasing could begin to be tapered in the near future.

EUR/USD: Monday 9:00 UTC 5th July: 1.18699

The Euro hit a 2 month low against the Dollar last week, falling to 1.18105. This comes as Raul Martins, head of the Portuguese Hotels Association, claimed the recovery of tourism in Portugal especially has practically come to a halt. In some Southern European countries, rising Covid-19 cases is only increasing the pressure on their tourism-based economies. A slight improvement in European, and in particular German data on Thursday, as well as an uptick to 5.9% in U.S. unemployment figures helped the Euro heading in to the weekend. Looking ahead to this week, Wednesday is very significant for the Dollar, with Fed meeting minutes being published. This could give some insight into potentially tapering asset purchasing, where in comparison, the European Central Bank seem firm on their stance in not tolerating higher inflation.