Sterling weighed down by Brexit and China
Reports of the UK abandoning Brexit negotiations and increased tensions with China weighed on the pound. The UK cancelled its extradition treaty with Hong Kong following Beijing's tightening grip on the city-state.
The $ underperformed throughout last week, with ongoing worries around escalating tensions with China and that the resurgence of Covid-19 cases could undermine the US economic recovery. The US ordered the closure of China's consulate in Houston amid accusation of Intellectual Property (IP) violations and the stealing of trade secrets.
EU leaders struck a deal to create a huge €750bn (£680bn) recovery fund to try to rouse the continent’s economy from the coronavirus crisis, causing stocks to rise.
Under the deal, €390bn will be disbursed as grants. The remaining €360bn will be distributed as low-interest loans.
Sterling outperforms Dollar
The £-$ rate started the week at its lowest point of 1.2525 but finished at the highs of 1.2775, with the dollar’s weakness outweighing the pressures on sterling.
Euro up on the Dollar
The €-$ rate rose significantly over the week starting the week at 1.1465 and rising to a high of 1.1625 on Thursday. The euro held these levels on Friday and has opened this morning at 1.1700.
Gold steadily rose throughout the week from Monday at $1,805 per ounce up to $1,900 on Friday. It is currently valued at $1,940.
Oil was up approximately one dollar in the week from $40.10 to $41.05 per barrel.
Equity markets continue to be supported by vaccine-discovery hopes.
Economic data this week: key events to note
Today – Monday 27 July
- German IFO
- US Durable Goods Orders
Wednesday 29 July
- German Import Prices
- UK Mortgage lending and approvals
- FOMC meeting and US rate decision
Thursday 30 July
- Europe unemployment rate and sentiment figures
- US GDP and Jobless claims
Friday 31 July
- Europe GDP and inflation rates
- US personal spending and core PCE price index
Looking ahead: see tomorrow’s bulletin for Bibby’s expert prediction for key currencies this week