Traders are likely to continue keeping the debt-plagued euro at arms-length which has helped push the British pound close to four-year highs against the single currency. However, Bank of England minutes will be a worry for investors while the pound could slip to fresh fresh-week lows against the safe haven US dollar if US retail sales data and the International Monetary Fund’s growth forecasts strengthen global growth concerns.
The pound managed a little elevation from improved market sentiment and heads comfortably above recent five-week lows against the US dollar and within reach of four-year highs versus the euro. Standing in the way of further advancement for the British currency will be the release of minutes from the Bank of England’s July 4-5 meeting. The notes will put on view the dialogue between the monetary policy committee before its recent decision to pump another £50bn of freshly printed money into the recession-hit economy. The minutes will be published in between key data on British inflation and unemployment and the pound may lose ground quickly if investors suspect a worsening economic outlook to spur policymakers into yet more emergency action.
US dollar
The US dollar’s record-breaking exploits will be put to the test with Federal Reserve chairman Ben Bernanke set to update Washington on the current condition of the US economy. The likely outcome of Mr Bernanke restating the dangers which lie ahead for the world’s number-one economy and going over another potential quantitative easing safety net if prospects worsen, should leave the US currency open to more speculative attacks.
Euro
The closely watched ZEW sentiment survey covering the month of July may help investors calculate the increasing damage Europe’s debt crisis is causing to the German economy which also adds pressure on to resist putting up more support for the eurozone’s debt-strapped periphery. The shared currency is already under a mountain of weight after a downgrade by Moody’s to Italy’s credit rating which has put the country’s finances back under the microscope alongside Spain.
Japanese yen
With a very quiet local economic calendar, the yen is expected to take its cue from global events, especially the Federal Reserve’s semi-annual update on the US economy. Additional concerns about global growth and more talk around the Federal Reserve quantitative easing plans should keep the yen from any material moves lower.