[vc_row][vc_column][vc_column_text]The pound put on a poor performance last week, with investors focused on Boris and Brexit.

However, it wasn’t plain sailing for the euro or US dollar either as both currencies came up against their own headwinds.

The pound hit new multi-month lows against the euro and US dollar last week as political uncertainty and no-deal Brexit fears took a toll.

Sterling spent much of last week on the back foot as the Conservative party leadership contest dominated headlines.

Current frontrunner Boris Johnson refused to rule out the option of proroguing parliament in order to push through a no-deal Brexit, limiting demand for the pound.

GBP losses were also recorded in reaction to the Confederation of British Industry’s distributive trade index, which showed that UK retail sales contracted at their fastest pace in a decade last month.
Additionally, the UK GfK consumer confidence index fell from -11 to -13.

Friday’s final Q1 growth data confirmed expansion of 0.5% in the first three months of the year, but the report failed to lift GBP exchange rates.

So far this week the UK’s manufacturing PMI has provided cause for concern by falling from 49.4 to 48.0, taking it further into contraction territory.

If Wednesday’s services PMI also shows a decline in output the pound could be in for a lacklustre week.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]

GBP/USD exchange rate slumped to 5-month low

US data disappointed last week but UK political uncertainty and demand for safe-haven assets drove GBP/USD to a five-month low.

Last week’s US jobless claims report and Chicago purchasing manager’s index painted an underwhelming picture of the US economy.

However, the US dollar held its own after Fed Chairman Jerome Powell issued comments reaffirming the central bank’s independence following critical remarks from President Trump.

Powell also commented on the likelihood of another US rate cut, indicating that while the case for another adjustment had strengthened, it wasn’t guaranteed.

He stated: ‘Crosscurrents have re-emerged, with apparent progress on trade turning to greater uncertainty and with incoming data raising renewed concerns about the strength of the global economy. […] The question my colleagues and I are grappling with is whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation.’

Towards the close of the week USD was undermined by the PCE Price Index, the Fed’s preferred level of inflation, which came in well below the bank’s 2% target.

But the US dollar still closed out the week higher against the pound and euro.

USD found support over the weekend from the news that US/China trade talks are now ‘right back on track’, with President Trump retracting adding US$300bn worth of tariffs on Chinese imports.

US data to look out for this week includes the ISM non-manufacturing/services PMI, final durable goods orders and the US non-farm payrolls report.

Any releases which support the case for a July interest rate cut could weaken the US dollar.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]

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