GBP/USD posts weekly loss on economic data

Today’s headlines

What’s happening: The British pound fell against the US dollar last week as investors digested recent economic reports.

What happened: Data released last week triggered speculations of the Bank of England delaying its interest rate cuts.

The GBP/USD forex pair slipped on Friday despite some weakness in the US dollar.

Why it matters: The last day of the week proved to be quiet in terms of domestic data from the UK following a busy week of reports. The UK released hotter-than-projected inflation figures, while wage growth showed signs of easing.

UK’s regular pay, excluding bonuses, surged by 5% year-over-year to £677 per week during the three months to May, recording the least growth in around three years. This was lower than the 5.3% gain reported in the previous period.

Headline inflation accelerated to 3.6% in June, compared to May’s reading of 3.4%. The figure also came in higher than market estimates of 3.4%.

Following the reports, several analysts, including Citi, Goldman Sachs and Bank of America removed their rate cut projections for both August and September. These analysts had earlier expected the Bank of England to cut rates in both the months.

Although prospects of fewer rate cuts by the BoE typically lends support to the sterling, it remained under pressure due to the implications of higher borrowing costs for public finances.

Weakness in the US dollar provided some support to the GBP/USD pair on Friday. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.3% to 98.46.

The GBP/USD slipped to 1.3409 on Friday. The forex pair recorded a weekly decline of 0.6%.

Meanwhile, London’s FTSE 100 Index gained 0.22% to close at 8,992.12 on Friday, while the more domestically-focused FTSE 250 Index rose 0.61% to settle at 21,898.26.

What to watch: Investors await the release of economic data on manufacturing PMI, services PMI and composite PMI from the UK on Thursday. The S&P Global manufacturing PMI, which climbed to 47.7 in June from 46.4 in the previous month, is expected to rise to 48.1 in July. Analysts expect the services PMI to rise to 53 in July from 52.8 in June, while composite PMI is projected to surge to 52.3 in July from 52.0 in the previous month.

Data on retail sales and consumer confidence, due to be released on Friday, will also remain in focus.

The markets today

European stocks in focus today ahead of some major economic reports this week

Context: Equity markets in Europe settled almost flat on Friday as investors assessed the latest earnings reports.

Details: Investors have been closely monitoring the earnings season to assess how companies are adjusting their outlooks to accommodate for the latest tariffs, ahead of the new August 1 deadline by US President Donald Trump.

Shares of Epiroc fell around 9% on Friday after the Swedish mining equipment maker posted weaker-than-expected results for the second quarter. Atlas Copco’s shares declined 8% after the industrial group reported downbeat adjusted operating profit for the quarter and lower orders.

Saab proved to be a bright spot, as the company reported upbeat second-quarter earnings and raised its sales forecast.

Industrials was the top performing sector on the Stoxx last week, while automobiles was the worst performer.

The STOXX Europe 600 Index closed almost flat at 547 points on Friday, ending the week in the red.

Germany’s DAX 40 fell 0.33% to settle at 24,289.51, while France’s CAC 40 edged higher by 0.01% to close at 7,822.67 on Friday.

What to watch: Data on the Eurozone’s manufacturing PMI, services PMI and composite PMI , due to be released on Thursday, will remain in focus. The HCOB Eurozone composite PMI, which climbed to 50.6 in June from 50.2 in May, is expected to rise further to 50.9 in July.

Analysts expect the manufacturing PMI to rise to 49.9 in July from 49.5 in June, while services PMI is projected to surge to 50.8 in July from 50.5 in the previous month.

Other Markets: US trading indices closed lower on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.32%, 0.01% and 0.07%, respectively.

The news shaping the markets

Ukraine’s President Zelenskyy said Russia sent a proposal offering another round of peace talks. The news sent the RUB/USD pair lower in forex trading this morning.

The People’s Bank of China held its key lending rates unchanged at its latest fixing, in-line with market estimates, which lent support to the CNY/USD forex pair.

New Zealand’s annual inflation rate rose to 2.7% in the second quarter, from 2.5% in the previous quarter, which sent the NZD/USD pair lower in forex trading this morning.

Colombia’s leading economic indicator surged by 2.8% year-over-year in May. This being a meaningful acceleration from 1.14% in the previous month lent support to the COP/USD forex pair.

Spain’s trade deficit widened to €2.54 billion in May, from €2.35 billion in the year-ago period, sending the EUR/USD pair lower in forex trading this morning.

What else to watch today

Germany’s 3-month Bubill auction (1330 UAE Time) and 9-month Bubill auction (1330 UAE Time), India’s infrastructure output (1540 UAE Time), Canada’s PPI (1630 UAE Time), raw materials prices (1630 UAE Time) and Bank of Canada’s business outlook survey (1830 UAE Time), France’s 12-month BTF auction (1700 UAE Time), 3-month BTF auction (1700 UAE Time) and 6-month BTF auction (1700 UAE Time), US CB leading index (1800 UAE Time), 3-month Bill auction (1930 UAE Time) and 6-month Bill auction (1930 UAE Time), as well as Argentina’s economic activity (2300 UAE Time).