- The pound weakens near the end of the week amid risk aversion.
- GBP / USD could post the lowest weekly close since April.
The recovery of GBP/USD it was short-lived and, after hitting 1.3865, it turned lower. It recently broke below the European session lows and fell to 1.3771, reaching the lowest level since July 9. It remains below 1.3800, on its way to the lowest weekly close since April.
Mixed dollar, bearish pound
Over the past hour, the pound has weakened across the board. EUR / USD broke above 0.8555 while GPB / USD broke below 1.3800. At the same time, stock indices turned negative on Wall Street. The Dow Jones is down 0.25% and the Nasdaq down 0.07% after a positive open.
Economic data for the US was mixed. Retail sales beat expectations with an unexpected 0.6% increase in June. The preliminary reading of consumer sentiment from the University of Michigan showed a drop in the main index to 80.8, below the expected 86.5. Next week, no major economic reports are expected in the US and Fed officials will remain silent before the next FOMC meeting (July 27-28).
Comments from Bank of England officials during the week, pointing to the need to reduce asset purchases earlier than expected, failed to lift the pound significantly. “The impact on the British pound was limited, in part because the next step in the eventual policy normalization process (rate hikes) is still a bit far off. Despite the increase in Covid-19 cases, the UK government will deliver the final part of the reopening / end of the restrictions on July 19 ”, ING analysts explain. Next week’s UK data includes June retail sales and July PMI, both of which are due on Friday.