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RationalFX : Biggest dollar decline in a decade

RationalFX : The pound completed a positive week across the board to end July, despite most positive currency movements for sterling being based off the back weakness of other currencies, in particular the US Dollar …

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GBP

Concerns of a second wave of infections and an economy that is flagging and growing pressure to reach a Brexit trade deal before a transition period ends in December are pushing the market to become wary of the pound’s prospects over the next few months.

Prime Minister Boris Johnson said on Friday some lockdown easing planned for the whole of England would need to be pushed back for the time being. Establishments such as casinos and bowling alleys, due to reopen on Saturday, have had their reopening pushed back for at least two weeks. Suggestions were also put forward to close pubs once schools are due to reopen.

USD

The dollar clawed back some loses against a basket of currencies on Friday as investors took end of month profits after the biggest monthly decline for the dollar in a decade.

The dollar index was down 4.1% for the month of July, the biggest monthly percentage fall since September 2010. The bulk of the loss was seen in the final ten days as coronavirus cases surged across the US and July’s data pointed to an economic recovery running out of steam.

Any strong dollar recovery does also seem to be being held back by President Trump’s idea that the presidential election, currently due for November, should be pushed back due to concerns over mail-in voter fraud.

Key announcements

14:00 – USD  – US ISM Manufacturing PMI; expected to rise to 54 from previous 52.6

Source : ETFWorld.co.uk

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