Delta variant cases fuel demand for USD

Key Movers

The euro drifted lower on the back of the broadly strengthening US dollar. The European Central Bank's Robert Holzmann yesterday said, “there is no room to increase rates given weak inflation” and added that the pandemic emergency purchase program will end once the COVID-19 emergency is over. This is consistent with the ECB messaging of late, with September being the next key time frame in which the market can expect a new announcement from the ECB. Historically, a conservative stance has sometimes negatively impacted the euro. EURUSD depreciated 0.38%, falling below 1.19 to trade at 1.1882 at the time of writing. The pound was down for the fourth straight day against the US dollar as the number of COVID-19 cases in the UK keeps rising. Yesterday saw a further 22,868 new COVID-19 cases, the largest one day increase in five months. GBPUSD was down 0.33%, trading at 1.3831 at the time of writing. Despite the recent downward pressure on GBP, according to some analysts the currency remains well supported by the country’s vaccination effort, economic performance and hope that the UK Health Secretary will stick with the target date of July 19 for ending restrictions. This sentiment was echoed by the UK Prime Minister, as he also stated that Britain is on course to stick to the new plan of restrictions being lifted, and this news could be positive for GBP.