US dollar continues to dominate major currencies
Daily Currency Update
Events that could trigger volatility for the pound include the Bank of England’s quantitative easing programme, the interest rate hike decision due on 5th August, economic forecasts, Brexit trade negotiations, and COVID-19.With over 50% of the UK population fully vaccinated, the government could still ease restrictions on July 19th, however there could be some opposition considering the UK reported 32,500 new COVID-19 cases yesterday. A further delay in lifting of the restrictions could dent GBP further.
Key Movers
The FOMC minutes were released yesterday, and the US dollar remains dominant against the majority of its peers. The minutes go into detail on why Fed officials are sounding more upbeat about the economic outlook, with an acceptance that “indicators of economic activity and employment had strengthened” and even parts of the economy most impacted by COVID-19 “had shown improvement”.There was an acknowledgment of the higher inflation readings, but the Fed is still of the mindset that this is “largely reflecting transitory factors”. They could be in a good place to consider a rate hike towards the middle or end of 2022, which could strengthen the US dollar in the longer term.
Expected Ranges
- GBP/USD: 1.3680 - 1.3875 ▼
- GBP/EUR: 1.1585 - 1.1745 ▲
- GBP/AUD: 1.8480 - 1.8630 ▲
- GBP/CAD: 1.7230 - 1.7450 ▲