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The pound and the euro continued to capitalise on a weak US dollar to approach their 2024 highs.
The US dollar continued to plunge on Tuesday, heading down towards its yearly lows against both the pound and the euro. Its rapid fall from grace has been fuelled in large part by a key week for the Federal Reserve, which releases FOMC minutes tonight before its annual get together.
Yesterday, GBP/USD rose by a quarter of a cent, briefly touching its highest mark this year. EUR/USD also approached the same milestone after picking up nearly 0.5%. It was a more even contest for GBP/EUR, which swung between minor gains and losses to finish at around where it began the day.
As we await events later this week, the lack of any meaningful data has meant the US dollar has wilted in the face of significant (and often excessive) anticipation. FOMC minutes will be watched closely tonight, but the really big event is on Friday when Fed chair Jerome Powell gives a major press conference.
For data lovers, it was slim pickings again on Tuesday. The eurozone reported its final inflation read for July was unchanged from preliminary estimates of 2.6%. That marked a slight uptick from June’s 2.5%, yet most analysts believe the European Central Bank (ECB) is lining up another cut in September.
As expected, Sweden’s Riksbank cut interest rates to 3.5% yesterday and said it could cut as many as three more times before the end of the year.
The price of gold set a new all-time high yesterday on sky high demand from the Chinese market. Meanwhile, crude oil steadied as the outcome of negotiations in the Middle East remained unclear.
After a near implosion earlier this month, global stock markets are remarkably on course for the longest spell of gains since December. A global stock market tracker found its selection of major indexes had finished up for nine days in a row, although Chinese markets have turned rather sluggish lately.
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GBP: Wind in its sails
GBP/USD continued to climb on Tuesday and analysts at Scotiabank expect that to continue. According to them, technical factors and the absence of major economic data mean that the pound could climb even further in the coming days, although as ever, that’s far from a given.
GBP/USD: the past year
EUR: Cuts to come
The ECB was the first major central bank to the monetary loosening party. If market predictions are anything to go by (and we’d be the first to cast doubt on this), then the euro should brace for the impact of another 0.25% cut to borrowing costs.
GBP/EUR: the past year
USD: From bad to worse
The US dollar has recorded three days of losses against a basket of rival currencies on the trot. As the US awaits comments from the Fed, the broader market pivot to a risk on tone has seen the US dollar struggle to pare back the losses it has suffered.
EUR/USD: the past year
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