Sterling was little moved against US dollar but crept closer toward fresh 13-month highs over the euro to start the week.
As a large portion of England endured a groggy day thanks to the late-night exploits of its national football side, America’s Independence Day holiday meant the weekend hangover extended right across the Atlantic. The next few weeks will be anything but relaxed, though, as the UK prepares to greet another new prime minister just as some more key economic data raises the temperature for the Bank of England.
The biggest exchange rate movements yesterday came for what will be peripheral currencies for most readers. The Japanese yen and the Canadian dollar both weakened against the pound on Monday. In the yen’s case, that was largely the result of rumours that the government was mulling another intervention to prop up the currency.
Nato members are gathering today for the annual conference in Ankara. US officials are reportedly ready to issue a sharp rebuke – a red card, if you will – to European nations they view as dithering towards the 3.5% of GDP defence commitment members agreed last year. It seems unlikely that one will be overturned.
The US services sector increased at a slightly slower pace than in May last month. The 54.0 score in S&P’s purchasing manager’s index (PMI) study still reflected the strong business environment, but respondents were quick to point out some lingering jitters around the impact of the energy crisis.
GBP: House price boost
It's been a tough market to sell property in Britain these past few months, but things might finally be looking up. Average house prices increased by 0.6% in the year ending in June, according to Halifax, above the 0.3-0.5% range predicted, but still close to the weakest level in three years.GBP/USD: the past year
EUR: Softer still
The euro lost more ground to the pound and the US dollar on Monday. Now testing its lowest level against each in over a year, the best bet for a recovery in the near future may come from economic data. Unfortunately for the euro, there isn’t too much of that to sink our teeth into this week.GBP/EUR: the past year
USD: A major shift
Last week, new Federal Reserve chair Kevin Warsh confirmed that he was ditching the closely watched interest rate projections that are customarily released alongside rate decisions. The so-called dot plot is a crucial indicator for markets, so that decision was more significant than it looked. US dollar investors will now have to other avenues to second-guess the Fed’s actions.USD/GBP: the past year
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