GBP/USD Hits 1.28 as USD Stumbles

Euro-dollar rallied yesterday, breaking US election highs to trade at its highest levels in a year, since the UK’s referendum, above 1.1370. Dollar weakness saw sterling-dollar hit 1.2800 in overnight trading. Sterling-euro fell below 1.1300 to test 2017 lows.

Previous Day's Market Highlights

Euro-dollar rallied yesterday, breaking US election highs to trade at its highest levels in a year, since the UK’s referendum, above 1.1370. Dollar weakness saw sterling-dollar hit 1.2800 in overnight trading. Sterling-euro fell below 1.1300 to test 2017 lows.
 
The euro strengthened following comments from ECB President Draghi, who said that deflationary pressures had been replaced by inflationary ones and that factors weighing on inflation may be temporary, although with the caveat that accommodative policy remains necessary.
 
Markets focused on the hawkish comments and speculated that later this year the ECB may signal a further tapering of QE.
 
The dollar came under pressure on a delayed senate healthcare legislation vote and as Fed Member Harker took a cautious tone on inflation, which has recently softened.  Fed Chair Yellen reiterated that the Fed would raise rates only gradually. 

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1274 1.1572 1.1261 2.69%
GBP / USD 1.2800 1.2978 1.2589 2.30%
EUR / USD 1.1358 1.1379 1.1119 2.28%
GBP/AUD 1.6846 1.7494 1.6612 5.04%
GBP / NZD 1.7600 1.8273 1.7338 5.12%
GBP / CAD 1.6820 1.7536 1.6721 4.64%

Today's Market Highlights

Central banks will be in focus again today as BoE Governor Carney, ECB President Draghi, BoJ Governor Kuroda, and BoC Governor Poloz speak in a panel discussion at the ECB Forum on Central Banking (14:30 BST).
 
Canadian dollar traders will keep an eye on weekly US EIA crude inventories (15:30 BST). Other releases to keep an eye on include the US’s Goods Trade Balance and Pending Home Sales (13:30, 15:00 BST).

Today's Economic Calendar

Time Currency Release Consensus Previous
09:00 EUR M3 Money Supply YoY (May 5.0% 4.9%
13:30 USD Goods Trade Balance (May) $-66B $-68B
14:30 GBP BoE Governor Carney Speaks
14:30 JPY BoJ Governor Kuroda Speaks
14:30 EUR ECB President Draghi Speaks
14:30 CAD BoC Governor Poloz Speaks
15:00 USD Pending Home Sales MoM (May) 0.8% -1.3%
15:30 USD EIA Crude Oil Inventories (Jun 23) -2.298M -2.452M
19:20 CAD BoC Deputy Governor Patterson Speaks