Slow Burner for the Currency Markets

Monday was a slow burner for the currency markets with nothing really of note happening or data releases to mull over.

The week started with just a handful of eco stats but nothing of key significance, leading investors to trade thinly. US released some home sales data while the EU saw consumer confidence figures for July, but being the preliminary reading, it held little hold over market sentiment, despite coming out slightly better than expected.

For the pound, the day was a quiet one, seeing some slow gains against the single currency euro over the morning, until the US markets opened, when these gains were slowly eroded over the afternoon. The trading range covered 22 pips all day, so really nothing to write home about.

The euro made some losses against the US dollar in the morning also, falling half a cent in early EU trade, although once again, as against sterling, it managed to claw back some losses in the afternoon, but with the US dollar being the main winner on a very quiet Monday, these gains were limited to 25 points, falling to just 10 by close of trade.

The dollar gained over half a cent against sterling over the day, as mentioned, being the favoured currency throughout the day. More likely risk averse trading practices from investors than anything else, especially as the war of words between the US and Iran heated up somewhat following a rather shouty tweet from the President, threatening “CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE” if Iran threaten the US of A again, following remarks by Iran’s President Rouhani that war with Iran would be the “mother of all wars”.

Today is busier for data releases with German and EU Markit manufacturing and services PMI in the morning, followed in the afternoon with the same for the US. An industrial trends release for the UK is unlikely to have much impact on sterling performance and with Brexit negotiations ongoing any volatility likely to come from the EU and US figures and investor sentiment.