GBP

Sterling opens 0.4% lower against the USD and the EUR this morning. This is once again down to a combination of elevated Covid-19 infections and Brexit related pressures. A monthly reading of private-sector economic growth weakened to a six-month low as supply constraints dampened service and manufacturing sector recovery. Sterling has largely traded in line with global risk sentiment in financial markets in recent weeks, tracking the direction of world stock markets higher or lower. This is likely to continue into next week with another quiet week of data for the UK.

EUR

EUR opens strong against the pound following the release of European Central Bank minutes yesterday. The minutes revealed that there was an extensive debate over the new guidance on interest rates and revisions to align with the board members hawkish views, supporting ECB Vice Presidents Luis de Guindos’ positive tones on Wednesday. Meanwhile against the USD, the EUR has managed to hold onto recent gains. The common currency remains resilient having hit 9-day highs against the dollar in Thursday’s session.

USD

Thursday’s US data largely came in as expected, with Q2 Gross Domestic Product (GDP) getting an upward revision to 6.6% QoQ versus 6.5% prior, just missing the expected 6.7%. This did little to move the market as investors awaited a highly-anticipated speech by Federal Reserve Chair Jerome Powell later today. On the whole, Powell is expected to strike a dovish tone and delay a move to taper until September. This is despite calls from Kansas City Fed President Esther George and St. Louis Federal Reserve President James Bullard, who downplayed the impact of the Delta variant in separate interviews, with Bullard repeating his call for the Fed to start trimming its $120 billion in monthly bond purchases soon. The dollar is likely to be volatile around the time of his speech which is expected at 14:00 pm today.

Economic Calendar

14:00 pm US Fed’s Chair Powell Speech