US economic uncertainty keeps dollar on back foot
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Daily Currency Update
Sterling began the week with modest gains, as GBPUSD hovered in the low 1.37's. The pair’s strength is largely attributed to ongoing US dollar weakness rather than any notable support from UK fundamentals. Domestic data remains soft, offering little momentum for the pound. UK housing figures released this morning showed slower than expected growth in June, with Nationwide citing reduced demand following April’s stamp duty hike. However, a rebound in house prices is anticipated later in the summer.Attention now turns to Bank of England Governor Andrew Bailey, who is scheduled to speak at the ECB Forum today. Given the BoE’s recent cautious tone, markets are not expecting any major policy revelations. Key UK data releases include the Final Manufacturing PMI for June.
In terms of outlook, GBPUSD could possibly consolidate within the 1.3700-1.3750 range unless Bailey’s comments surprise markets or upcoming U.S. data significantly underperforms. Overall, the pound remains in a holding pattern, with external factors and geopolitical events playing a more influential role than domestic developments.
Key Movers
The US Dollar is under pressure amid rising political interference and economic uncertainty. President Trump has intensified criticism of Fed Chair Jerome Powell, demanding immediate rate cuts and pushing a $3.3 trillion fiscal package, which has raised concerns over deficit spending. Markets are now pricing in over 50 basis points of Fed rate cuts. Attention is focused on Powell’s speech at the ECB Forum in Sintra, where any shift from the Fed’s cautious stance could further weaken the dollar. Key upcoming US data this week includes ISM Manufacturing PMI, JOLTs job openings, and Nonfarm Payrolls, which are expected to show a slowdown in hiring.The euro extended its rally on Monday, breaking above 1.18 to peak at 1.1807, driven by persistent US dollar weakness and dovish Fed expectations. Despite mixed Eurozone data such as a -1.6% drop in German retail salles, investor sentiment remains upbeat, with markets focusing more on global monetary dynamics than domestic fundamentals. At the ECB Forum in Sintra, President Lagarde and other officials emphasised caution yesterday and data dependence, signalling no rate moves before September. The EU’s acceptance of Trump’s universal tariff proposal gave the euro a slight lift at the start of the week. Today’s Eurozone Flash CPI is in focus, with EURUSD poised to test 1.1800 further depending on the reading.
Expected Ranges
- GBP/USD: 1.3725 - 1.3820 ▲
- GBP/EUR: 1.1610 - 1.1705 ▼
- GBP/AUD: 2.0685 - 1.0800 ▼
- EUR/USD: 1.1710 - 1.1840 ▲