Currency markets should find some positive and risk-taking momentum with a statement from the G20 supporting separate developments in China and Japan, the world’s second and third biggest economies respectively.

G20 officials agreed countries must ease austerity and focus more on economic growth; a shift that is already bringing investors back into the eurozone.

The stronger but still vulnerable British pound will face another significant examination as investors anticipate Britain’s second-quarter GDP data. Positive numbers could support another sterling bounce before markets start making preparations for next month’s key announcements from the Bank of England.

US monetary policy still remains high on the agenda. However, with markets not expecting any comments or policy guidance from Federal Reserve, investors may use this as an opportunity to take profit on its July gains.

Sterling

Worries about structural changes to UK monetary policy in August are likely to keep the British pound vulnerable for some weeks yet, although second-quarter UK GDP data could provide another short-term boost for sterling. Positive GDP data in the first quarter ended the threat of a triple-dip recession, and economic growth is forecast to have accelerated between April and June as Britain’s economic recovery gathers momentum.

US dollar

As expected, a G20 gathering focused on US monetary policy and what impact a less accommodative Federal Reserve will have on the global economy. However, the post-meeting statement is so far offering a generally weaker US dollar very little new direction ahead of a week void of top ticket US economic data. Furthermore, markets are not expecting any comments or policy guidance from Federal Reserve speakers but investors may use this as an opportunity to take profit on the US currency’s July gains.

Euro

In spite of longer-term concerns, the euro could move higher in the coming days amid hopes the 17-member economy is on a recovery path and will not require further Central Bank support. Analysts expect the latest PMI data on Europe’s services and manufacturing industries to indicate a rebound, reducing pressure on the European Central Bank to explore new monetary easing measures. A meeting between EU finance ministers will also be watched, as will IFO data for signs about the strength of Europe’s main economy, Germany.