The Pound was one of the weaker G10 currencies last week. Price action in the currency was dictated by the Bank of England, whereby the central bank kept interest rates on hold at 0.25%, alongside an expected 6-2 vote.
Meanwhile, the Quarterly Inflation Report showed the Bank of England had downgraded their growth and wage forecasts. In its latest update on the UK economy, the BoE said it expects GDP to expand by 1.7 per cent this year, down from a May estimate of 1.9 per cent. On inflation, it maintained its outlook for prices, which it expects to peak at 3 per cent in October.
After touching highs against the Dollar not seen since September last year, the Pound went on to lose 0.7% versus the US Dollar, 0.9% versus the Euro and 0.7% versus the Yen.
The Euro was the top performing currency last week after key Euro Zone data readings, such as the July CPI report and the initial second quarter GDP release, either meeting or beating expectations.
The upcoming Euro Zone economic calendar is considerably lighter, meaning sentiment and positioning will play a greater role in Euro price action in the coming days.
The US Dollar traded around 15-month lows for much of the week amid a backdrop of poor US data, most notably the ISM report on Thursday. However, better than expected Non-Farm Payrolls provided some relief, adding 209,000 jobs against forecasts of 183,000. The unemployment rate fell to 4.3 per cent, the lowest since 2001.
The Yen saw a modest drop on balance last week, with a late shift in investor sentiment weighing on the safe haven currency. Weaker than expected Japanese PMI data and a sharp decline in workers monthly wages in June also provided some downward pressure.
The Australian Dollar fell against most of the major currencies last week, as the RBA signalled discomfort with the rising Aussie dollar.
Rates were unchanged as expected, while the central bank highlighted that the higher Aussie dollar is weighing on price pressures and would slow economy.
The Canadian Dollar was the worst performing G10 currency last week. Prices of oil, one of Canada’s major exports, were down on the week, pressured by rising OPEC exports and strong US output.
Meanwhile, domestic data showed a jump in Canada’s trade deficit, although the unemployment rate fell to its lowest level since October 2008 in July.
NEW ZEALAND DOLLAR
The New Zealand Dollar fell against most of its G10 peers last week amid growing expectations the RBNZ will attempt to jawbone the currency following last month’s news of slower-than-expected second quarter inflation.
The Swedish Krona fell last week, weighed by slowing manufacturing PMI growth in July. The NIER also reported that Sweden’s economy is set to expand at a faster rate this year than projected earlier, but the pace will slow sharply next year.