Last Week, Gbpusd Surged By More Than 1.5 Percent Touching The Higher Levels Of 1.3983 Levels Due To Recovering Risk Sentiment In Global Markets
- Weekly Signals
- 2021, 31 July
Last week, both GBPUSD and GBPINR surged by more than 1.5
percent touching the higher levels of 1.3983 and 104.06 levels
respectively due to recovering risk sentiment in global markets
that boosted the demand for currencies correlated with
economic growth. Also, the UK’s Covid-19 infections dropped to
the lowest in over three weeks while the death toll halved to 14
from 28 which worked in favour of GBP.
Moreover, British retailers reported only a slight slowdown in
July after sales growth hit its highest in almost three years in
June, the first full month after non-essential shops reopened
from a coronavirus shutdown. This boosted the sentiments.
Markets shall remain cautious ahead of the BoE Monetary
Policy next week which appears set to keep its stimulus running
at full speed.
The US dollar did not benefit from FOMC events. From Wednesday until late on Friday, it fell across the board. Next week, the key report will be the Nonfarm Payroll report. “Payrolls probably surged again in July, with the pace up a bit from the +850k in June. Some acceleration in the private sector is suggested by the Homebase data, while government payrolls probably benefited from favorable seasonal adjustments. We forecast another 0.3% m/m rise in average hourly earnings. The 12-month change is likely to rise again to 3.8% from 3.6% in June”,
In the UK, attention continues to be on COVID-19 developments. If cases accelerate, it could hurt market optimism on the economic recovery. Next week, the Bank of England will meet. No change in monetary policy is expected. “We have become more confident in our bullish GBP outlook. While there is a risk that the BoE could disappoint hawkish expectations next week, any GBP weakness should be temporary”.
Buy above 1.3270 for 1.4375 and 1.5000
sell below 1.3270 for 1.2675 and 1.2050