GBP

Sterling opened relatively unchanged against the Euro this morning having so far failed to make any gains towards EUR 1.1700. There are reports in the press today that PM Boris Johnson is considering a return to normality 2 weeks earlier on the 5th of July should the Delta variant infection numbers improve whilst Bank of England’s Haldane yesterday said the UK economy was now close to pre-pandemic levels. However, UK month on month retail sales for May came in below consensus (-1.4% v +1.5% expected), Sterling is now challenging major support of $1.3900. With this change in US Dollar sentiment, a close below here could well attract Sterling sellers again. In yesterday’s by-election in Chesham & Amersham, the Tories were dealt a blow as Lib-Dem candidate Sarah Green won the seat, this had been a Tory stronghold since 1974.

USD
US Dollar buying extended on Thursday across the board. The Federal Reserve statement on Wednesday and their change of views on inflation and interest rate expectations going forward, may have shifted the longer-term technical trend on the Dollar from negative to positive. The Euro is now down 2% from this week’s highs with Sterling seeing losses of 1.5%.

EUR
German producer prices rose above consensus in May (+1.5% v +0.7 expected), however, the Euro remains under pressure. Technically, key support is now seen at $1.1850, a close below here would indicate extended broad-based Dollar strength is possible.