The Bank of England kept monetary policy unchanged as widely anticipated with BOE Governor Andrew Bailey stating inflation could peak more than expected at around 4% in Q4, repeating that this is expected to be only temporary. As a result, Sterling has held onto gains, edging higher against the Euro but very much unchanged against the US Dollar ahead of today’s US data release. This week has seen Sterling hold above key levels of $1.3900 & EUR 1.1700 despite a rise in new Covid cases yesterday to above 30,000, although covid NHS ‘ping alerts’ have fallen by 43% this week.

The US Dollar has had a mixed week ahead of today’s June non-farm payroll data release at 1.30pm as the Dollar index (DXY) failed to break major technical support at 91.90. Other than the fears of the COVID-19 and expectations of monetary policy adjustments, US Senators’ pushing back the votes on their infrastructure spending bill to the weekend has also favoured the US Dollar moderately so.

With the Dollar ending the week on a slightly firmer footing and failure for the Euro to hold above $1.1850, the common currency has lost any momentum across a broad range of currencies. This level is likely to be key going forward following mixed economic data from the Eurozone over the last four days.