Daily currency update
The market is heavily focused on upcoming US economic data and central bank policy decisions (Federal Reserve Bank on Wednesday and potential Bank of England cut next week). The recent EU-US trade deal has alleviated some immediate trade war concerns, but the broader narrative seems to be one of USD strength driven by a potentially more aggressive Federal Reserve bank stance compared to other central banks. Both the Euro and the Pound are under pressure, with technical indicators suggesting further downside if key support levels are broken.
Key movers
The key data this afternoon will be the US Job Openings data where this will provide insights into the US labour market and the US July Consumer Confidence which is another key indicator of US economic health.
The British Pound (GBP) has fallen for a third consecutive day against the USD, reaching its weakest level in over two months. This is partly due to broad dollar strength and growing expectations of a Bank of England (BoE) rate cut by next week. The GBP/USD pair has broken out of its 2025 uptrend channel.
The Euro (EUR) has seen a significant sell-off recently, with EUR/ USD plunging. This is attributed to a correction from strong gains last week, a “stress test” on previously high-conviction long Euro trades, and the Eurozone economy still facing headwinds.
The focus from Australia overnight has been on financial regulatory updates, the government’s positive outlook on inflation ahead of new data, some mixed corporate news, and the ongoing assessment of a potentially weakening labour market that could influence future RBA rate decisions.
Expected Ranges
GBP/USD: 1.3280 – 1.3320 ↓
GBP/EUR: 1.1520 – 1.1550 ↑
EUR/USD: 1.1560 – 1.1580 ↓
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