Weekly Report

Market analysis

Date: Tuesday, 19th of July 2016

Highlights:

• EUR/USD : Fell sharply after failed coup attempt on Turkey
• GBP/USD : Holds onto sharp gains after BOE leaves key rate unchanged
• USD/JPY : Set for biggest weekly drop as China data boosts risk
• USD/CAD : Moves lower after BoC hold interest rates unchanged
• Gold : Falls slightly amid surging dollar, halting 6-week winning streak
• Crude Oil : Capping volatile week as U.S. oil rigs move higher

GBP/USD

Holds onto sharp gains after BOE leaves key rate unchanged

The pound briefly rose above the 1.30 level against the dollar on Monday, boosted by prospects that Theresa May will become the next U.K. prime minster much earlier than had been anticipated. On Tuesday the pound extended gains against the dollar and the yen fell further as political uncertainty in the U.K. eased and Japan prepared fresh economic stimulus measures, boosting risk appetite. Sterling found support as investors reacted to the news that Britain’s home secretary Theresa May would soon replace David Cameron as prime minister, removing some of the political uncertainty that has hit the currency in the wake of the June 23 vote to leave the European Union. Carney also refuted allegations that the central bank attempted to scare voters about the economic risks of a Brexit vote in the run-up to the referendum, describing the allegations as “extraordinary”. On Wednesday Britain's vote to leave the European Union is raising questions about sterling's place among the small, elite group of hard currencies underpinning the financial system. For Britons, the impact may feel slight or even ambiguous. Consumers of imported goods may see them become more expensive and travelers will find foreign trips more costly. Exporters, on the other hand, may find their products more competitive abroad and any overseas earnings get a boost. The pound rose considerably on Thursday, holding onto sharp gains from earlier in the session, after the Bank of England triggered a rally in the Pound by unexpectedly leaving its benchmark interest rate steady at a closely-watched meeting. In the U.K., the Bank of England jolted markets by holding their key interest rate steady at 0.5% and leaving its comprehensive Quantitative Easing program unchanged on Thursday afternoon. Following the 8-1 vote, Bank of England governor Mark Carney hinted that the BOE could approve fresh stimulus measures when meets again on August 4.