The pound has benefitted from talks of a cross-party government replacing Boris Johnsons current team, with GBP/EUR rates rising an impressive 2% and GBP/USD moving up 1% since the lows of last week. Talk of a caretaker government has lowered the chances of a ‘no-deal’ Brexit for now, hence the movement for the pound. Whilst the chances of a potential cross-party government are slim, investors will be looking for any advances on this news and should the chances of this becoming a reality increase then expect Sterling to react accordingly. The G7 summit will be starting this weekend over in France. Boris Johnson will be in attendance so all eyes will be there come the end of the week.
The Eurozone will be releasing a host of preliminary PMI figures this week which could have a bearing on the single currencies’ movements over the coming days. All three releases are expected to show a decline from the previous reading, which could weigh on the price of the Euro and show that the Eurozone economy is in need of a kickstart. This makes the release of the European Central Banks meeting minutes on Thursday all the more important. These minutes will be closely scrutinised for any hint as to how much stimulus the ECB are considering, with Quantitative Easing expected to be introduced in September. There is real potential here for the meeting minutes to be a market mover for the single currency.
The Federal Reserve will also release the minutes from their meeting this week, out on Wednesday. Analysts and investors will be listening out for any hint towards future monetary policy to gain a clearer idea of the plan going forward regarding interest rates in the U.S. They will also be releasing their housing data figures over the course of the week. Existing homes sales are expected to show an increase on Wednesday and then new home sales are expected to show a decline on Friday. Housing data in the U.S. has been poor as of late so the greenback could be sensitive to any deviation of the expected outcomes.