British Pound rose again in the trading session of the early week after policy maker at Bank of England (BOE) Martin Weale said that they need to wait for the assessment of the economic impact before deciding whether to rate cut or not. After BOE took no action last week, any doubts of the members of BOE on the need to easing monetary policy given push Pound higher.

However, many analysts believe that sterling is in brief recovery period and the clearance-sale of the currency will soon return. A series of important statistics of the British economy published this week include the inflation data, employment, retail sales and PMI index is forecast to show the weakness of the British economy and convince BOE on the necessity of easing interest rate policy. Britain's weak data published this week could be the beginning of a sharp decline of Pound.

Turkey has arrested thousands of soldiers after the coup failed yesterday 15th of July and the government claimed to have control of the whole situation. This move has helped to allay fears of new instability after the economic and political issues in Europe, this prompted investors to return to riskier currencies and escape Japanese yen as safe haven assets, so it pushed USD/JPY back to threshold 106 after falling last week.

Aside from the economic data of UK, the market's attention this week was focused on the PMI of Eurozone and the results of the meeting of European Central Bank (ECB). Analysts predict ECB will not make any policy changes in this session. However, ECB President Mario Draghi might open to a stimulus in the near future if Eurozone economic prospects deteriorate due to the influence of Brexit. Any signals of easing policy given will create downward pressure on Euro.

GBP/USD: SELL: 1.3280; TARGET: 1.3130; STOP-LOSS: 1.3360

Thong Le

Published in Trading strategies

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