[vc_row][vc_column][vc_column_text]The pound traded in a wide range last week as growing fears of a no-deal Brexit saw the UK currency collapse.

GBP later clawed back some of its losses thanks to some upbeat data, but Sterling is back on the defensive at start of this week, with GBP/EUR dipping to €1.1107 and GBP/USD sliding to US$1.2472.

Looking to the week ahead, traders will be bracing for a busy session, with a new UK PM, the European Central Bank’s (ECB) latest rate decision and US GDP figures all likely to exert some notable movement in currency markets.

The pound was met by some wild swings last week as heighted political uncertainty and no-deal Brexit jitters dominated headlines.

This saw Sterling nosedive through the first half of the session, with the pound striking fresh multi-month lows against the majority of its peers.

GBP losses came after both candidates in the Conservative leadership race suggested the Irish backstop was dead, something which greatly increases the risk of a no-deal Brexit due to the EU’s refusal to drop the backstop.

The focus on politics saw investors largely ignore UK data published in the first half of the week, with a surprise rise in domestic wage growth in May unable to counteract the Brexit jitters.

However, the pound was able to claw back most of its losses in the tail end of the week, initially being buoyed by some stronger-than-expected UK retail sales in June. The sales figures bolstered optimism that the UK economy will have avoided contraction in the second quarter.

This support for Sterling was then shored up by UK MPs passing an amendment designed to make it harder for the next PM to force through a no-deal Brexit by closing parliament.

Looking ahead, with a new PM set to enter office we expect to see some significant volatility in the pound again this week, with fears that the new government will strike a harder tone on Brexit likely to place some notable pressure on GBP exchange rates.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]

Euro mixed ahead of ECB meeting

Trade in the euro was mixed last week as a lull in impactful data left markets to focus on the European Central Bank (ECB).

The only notable release last week was the publication of the Eurozone’s latest economic sentiment index on Tuesday, with an increasingly gloomy outlook for the bloc resulting in some weakness in the single currency.

Other than that the main driving force in the euro was speculation regarding the ECB stimulus plans and whether this may come in the form of rate cuts or the re-introduction of its quantitative easing programme.

The ECB’s rate decision on Thursday will be the main EUR mover, and while no policy changes are expected we are likely to see the euro react if the bank drops any hints regard its stimulus plans.

Also likely to impact the single currency will be the publication of the Eurozone’s latest PMI figures, with the euro potentially drifting lower mid-week if private sector growth in the bloc is shown to have slowed as expected in July.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]

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