The GBP Foreign exchange rate has shown the best performance in July. Showing strength against the euro and the dollar after months of underperformance.
EU Chief Negotiator Michel Barnier, in a press report, says that he is confident of a Post-Brexit trade deal. The EU trade deal has to be finalized by 31 Dec. There are many contentious areas to be addressed, and further talks are expected on post Brexit competition rules. The GBP FX rate shows signs of strength and with new hope of an agreement.
BOE will report its future monetary policy on Thursday, to bring improvements in the country’s economic conditions towards handling the pandemic. However, experts say that after the 100 billion pound stimulus announced in June, not much more can be expected.
GBP Foreign exchange Rate Best Performing Major Currency
Reports say that self-isolation from coronavirus symptoms may be extended to 10 days instead of 7 days that is currently followed. Earlier, travellers from Spain were asked to be under a 14-day self-quarantine.
The UK economy is showing traces of recovery, and the GBP FX rate is strengthening against the US dollar. The UK Economic Sentiment Indicator has risen to 75.5 in July against 65.2 in June, which is good news for the economy, state economists.
The Sterling Appreciates against the Declining Dollar
The GBP/USD pair is growing strong of late against the falling dollar index.
The GBP FX rate against the dollar has performed well in July. It closed above the critical level of 1.300 for the first time after the chaos created by the pandemic in March. The weakness in the US dollar is one of the causes of the strength in the British Pound.
On the 4-hour chart, the GBP/USD Relative Strength Index is at 85, pointing to an overbought situation.
The GBP/USD pair had closed at 1.3090 on Friday, last week. The GBP/USD pair faces resistance at 1.3171 levels, followed by 1.3200. Support levels are at 1.2944 and 1.2780.
GBP FX Rate against the Euro is Strong
The euro has appreciated by 10%, while the dollar has weakened. The coronavirus rescue passage was approved in July, which shows solidarity between leaders in the Eurozone.
Germany is facing its largest contraction, which is much deeper than expected. The lockdown caused by the coronavirus crisis has brought sluggishness in economic activity.
The GBP foreign exchange rate against the euro looks forward to the UK Manufacturing PMI on Monday. The forecast remains unchanged at 53.6. With the manufacturing sector improving, the GBP/EUR may strengthen.
The GBP/EUR pair closed at 1.1108 on Friday, last week. If bulls take control, the currency pair will move upwards to levels of 1.1137 and 1.1160. However, if there is a negative sentiment, the currency pair may take support at 1.1054 and further at 1.1012.
EUR against GBP FX Rate Tests Crucial Support Level of 0.9000
The EUR/GBP closed at 0.9093 on Friday, last week. The currency pair is falling towards 0.9000 levels. The upcoming policy meeting may bring in weakness in the GBP. The EUR/GBP pair has to rise above 0.9110 to move towards 0.9137 and 0.9179. It has support at 0.8948 and 0.8900.
Weak US Dollar Loses its Appeal
The US dollar has performed poorly against its basket of peers. The decline in the dollar reflects potential weakness in the economy as the pandemic continues to prevail in the southern regions. It is mismanagement that is making the US dollar weak say, experts. The dollar has fallen to multi-year lows. The Federal Reserve states that the path of recovery of the economy depends on “the course of the virus”.
The nonfarm payroll release by the US Labour Department is on Friday 7, Aug. Analysts expect 1.51 million jobs to be added in July, while June data was at 4.8 million. Last week, initial jobless claims reported the second week of increase.
The economic relief package in the US continues to remain at a deadlock, and the White House is not able to bring talks to a close. Macroeconomic data remains weak, and the pandemic refuses to come down in various parts of the US.
With the US economy contracting by 32.9%, the yield curve is at a vulnerable 1% level. Government bond prices are at record highs, which predict low growth.
Most currencies trade against the dollar. The current weakening in the US dollar is a threat to its power as the world’s reserve currency. The US dollar index was at 93.32 on Friday, but it touched lows of 92.55, strengthening the GBP foreign exchange rate against the dollar.
In Japan, the yen was trading at 104.35 against the dollar. The yen is growing strong, from the coronavirus scare. The country depends on its exports, and the strengthening yen may cause harm to its export fears Taro Aso, the Japanese Finance Minister.
Putin Signs Cryptocurrency Bill into Law
Russia passed a bill to regulate its cryptocurrencies last week. Russian President Vladimir Putin has signed a law on Friday to regulate digital financial asset transactions (DFA). The law will come into effect on 1 Jan 2021. Bank of Russia states that its banks and exchanges can exchange digital financial assets once they register with Bank of Russia, its central bank.
Gold touched a record peak of $1,983 per ounce last week.