Foreign Exchange Update 13th July 2020
A fortnightly look at global financial markets by deVere Groups, Senior Investment Strategist Tom Elliott.
EUR/USD is trading close to 1.1300, kicking off the new week on solid ground at 1.1315, as the wider U.S. dollar recovers. The pair remains vulnerable to broader market sentiment, as the data docket remains light on Monday. However, analyst and technical forecaster Richard Perry says that the forecast for the euro remains bullish.
The Pound-to-Dollar exchange rate has now climbed for two consecutive weeks and was seen hitting 1.2618 on Monday. The shared currency is holding on to an uptrend formation which has been building over the past two weeks. Britain’s Michael Gove called for faster progress on Brexit, as continued differences persist in post-transition discussions.
The pound sterling is looking to gain a third weekly advance against the euro and dollar. Brexit negotiations will be the highlight in Brussels this week, during which further positive developments must be offered, otherwise the British currency will likely extend its recent gains. The pound has rallied throughout July, with an ING strategist saying that “less than a 3% risk premium is currently built into GBP vs EUR.”
Elsewhere, the Pound-to-Canadian dollar climbed for a third consecutive week and could fortify the hold it has on the recently recovered 1.70 mark, especially if the Loonie continues to underperform and lack of progress in Brexit talks both persist.