Home Daily Commentaries Movement subdued on the 4th of July holiday

Movement subdued on the 4th of July holiday

Daily Currency Update

June manufacturing activity across the Eurozone disappointed yesterday with major locations Germany and Italy both missing forecast and falling below previous figures. The ISM manufacturing index from the US yesterday afternoon also indicated that the sector is in recession, with few signs of a turn any time soon. The release came in at 46.0, below the 47.1 consensus and weaker the 46.9 reading from May. This is the worst reading since May 2020 and the eighth consecutive reading below 50.00 (the border between growth and contraction). Despite the release, GBP/USD has seen subdued movement in the past 24 hours trading in a narrower range between 1.2670 and 1.2710. A similar narrow movement has been seen between GBP/EUR with the pair bouncing between 1.1625 and 1.1650.

It is a US bank holiday today, with the 4th of July celebrations taking place. Data elsewhere is thin on the ground, with only low currency impact data expected. German trade balance and Spanish unemployment have already been released with both missing expectations and falling below previous figures. Tomorrow we will see European services data early, but the key release will come from the US with the FOMC meeting minutes with the FED expected to emphasize that core inflation is proving to be stickier.

Key Movers

The Australian central bank held its official cash rate overnight at 4.10% in a closely watched decision. Economists were split on expectations ahead of the decision between no hike and a 25-basis points hike – A sway towards the hike. The decision was met with comments that inflation in the economy has passed its peak, but further tightening of monetary policy may be required to ensure that inflation returns to target. GBP/AUD jolted from just under 1.9000 to 1.19090 on the news and AUD/USD dropped below 0.6650 from 0.6680. These movements seem to have been a knee-jerk reaction and the following comments have seen the movement drift back to pre-decision rates.

Expected Ranges

  • GBP/USD: 1.2640 - 1.2720 ▲
  • GBP/EUR: 1.1620 - 1.1660 ▲
  • GBP/AUD: 1.8960 - 1.9090 ▼
  • EUR/USD: 1.0860 - 2.094 ▲