GBP,EUR and USD weekly forecast

GBP

The Pound started the week flat against other currencies, despite the Confederation of British Industry's latest industrial trends survey surpassing expectations. On Wednesday, however, the Pound came under pressure following the release of the CBI's latest distributive trades survey.

The index revealed an unexpected drop in retail sales in June, heightening concerns that the UK's economic recovery might be stalling.

Friday saw the UK's final GDP reading for the first quarter was revised upward from 0.6% to 0.7%, reflecting the strongest growth rate since the last quarter of 2021. Despite the positive reading, Sterling struggled to attract support as a cautious market mood weighed on the increasingly risk-sensitive Pound.

Looking forward, the primary drivers for the Pound exchange rate this week will be the UK's upcoming election and several scheduled data releases.

On Monday, the final manufacturing PMIs for June are anticipated to continue to grow, potentially providing Sterling with a robust beginning to the week.

On Wednesday, the crucial services sector PMI survey is also projected to remain in expansion territory, which is expected to strengthen GBP exchange rates during mid-week trading.

On Thursday, Sterling is expected to see movement with the UK's general election. Any unexpected results could introduce significant volatility into the Pound by the end of the week.

EUR

The Euro began the week struggling for support after the release of Germany's latest Ifo business climate survey.

The index for June reported an unexpected decline in business morale, which ultimately dampened EUR sentiment at the start of the week. As mid-week trading progressed, the Euro faced renewed weakness due to an unforeseen drop in German consumer confidence.

On Thursday, the Euro managed to overcome Wednesday's decline in Eurozone economic sentiment, supported by indications of increasing consumer inflation expectations. However, the common currency ended the week on a weaker note following the release of the latest German jobs data.

German unemployment unexpectedly increased for the first time in six months, rising to 6% instead of remaining at the expected 5.9%. As the survey reached its highest level since May 2021, the Euro faced difficulty in gaining support by the end of the week.

The Euro struggled to gain much traction on Friday, given the upcoming election in France over the weekend.

Looking ahead this week for the Euro, on Monday, German inflation is projected to decrease from 2.4% to 2.3%. If the data meets expectations, this is likely to increase bets on European Central Bank interest rate cuts, potentially weakening the single currency as a result.

On Tuesday, both core and headline Eurozone inflation are expected to moderate, which is likely to maintain downward pressure on the Euro. Also on Tuesday, the Eurozone's unemployment rate is expected to stay at record lows, which could continue to put downward pressure on the EUR.

On Thursday, Germany's upcoming factory orders are anticipated to reflect a rebound in the latest reading, potentially offering modest support to the common currency.

Lastly, on Friday, an unforeseen rise in both German industrial production and Eurozone retail sales is anticipated to strengthen the Euro, potentially leading to a stronger finish to the week compared to its counterparts.

USD

The Dollar started the week weakening against its counterparts due to a sparse data calendar, leaving the currency susceptible to profit-taking following its rally at the end of the previous week.

Tuesday was quiet for the US Dollar, with some hawkish comments from Federal Reserve policymaker Michelle Bowman the only notable talking point which bolstered the USD. Bowman indicated that she was open to raising interest rates again if progress on inflation were to 'stall or even reverse course'.

Wednesday continued with an absence of significant data, the safe-haven US Dollar was strengthened by a cautious market sentiment.

On Thursday, the Dollar weakened against other currencies despite the release of domestic data. While US durable goods orders exceeded expectations in May, suggesting stronger demand, the latest initial jobless claims lingered near a ten-month high, which tempered the currency's performance.

The US Dollar ended the week struggling to attract support after the Fed's preferred inflation measure, the core PCE price index, eased from 2.8% to 2.6%.

Looking ahead this week for the US Dollar, the upcoming US ISM manufacturing PMI is anticipated to stay in contraction territory but show an uptick in sector activity, potentially providing support for the USD at the beginning of the week.

On Wednesday, the expected continuation of the US ISM services PMI in the expansion zone could provide support for the US Dollar.

On Wednesday evening, the release of the Fed's latest meeting minutes could inject volatility into the Dollar, especially if the forward guidance is perceived as dovish.

Looking towards the end of the week, Friday's release of the latest US jobs data is expected to show a decline, likely resulting in USD exchange rates ending the week on a weaker note.

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