Forex snapshot

The pound is broadly unchanged versus the US dollar ahead of the services PMI report at 9.30am. The euro has been range-bound for the past three trading sessions, as volatility is low.

GBP/USD currency
Source: Bloomberg

Sterling awaits services figures

The pound is trading at $1.6855. As Alastair McCaig stated, due to dollar strength the pound has lost a lot of ground in recent weeks. Traders are expecting a reading of 58.1 in July for the services PMI report, which could set the tone for the Bank of England meeting on Thursday. Mark Carney’s language in the statement will be the focus of the week. The debate continues; which country will be the first to increase interest rates?

I don't anticipate the pound to drop below the $1.68 mark even if the services report misses expectations. A strong report could push the pound to $1.6929.

Euro remains within tight range

The euro is trading at $1.3416. Traders are looking ahead to the eurozone retail sales announcement at 10am (London time). The consensus is for an increase of 0.4% in June. The highlight of this week will be the European Central Bank rate decision and press conference on Thursday, at 12.45pm and 1.30pm (London time) respectively.

No change to the interest rate is expected, but the press conference may give us an indication of what Mario Draghi is thinking. I suspect Mr Draghi will discuss the tools available if required, which could drive the euro towards $1.3380.

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