This week has witnessed substantial losses for the Euro against most major currencies, with both the USD and GBP gaining over one per cent. The strength of the single currency in the past month notwithstanding, it is a welcome relief to see the Pound pushing away from the low 1.10s. The Euro’s weakness early this week seems to stem from anticipation surrounding inflation data across the Eurozone and the renewed escalation of the Ukraine-Russia conflict.

Despite starting the week on the back foot, the Euro sellers’ hopes were dashed as the CPI data released on Wednesday and Thursday had the opposite effect, propelling the Pound to a six-month high against the Euro. The softening of inflation across the board has tempered expectations of ECB interest rate hikes up until the end of the year, thereby triggering the sharp selloff witnessed throughout the week.

The US Dollar experienced a strong second half of May, erasing the gains made by the Euro and Pound in the first half of the month. However, this momentum did not carry into June. The likelihood of the Federal Reserve keeping the base rate at 5.25% increased, and the successful passing of the debt ceiling increase through Congress led to Sterling reclaiming lost ground.

This afternoon, all eyes will be on the US employment figures, as we gauge whether the tight labour market will continue its recovery. If the ADP Non-Farm Employment Change figures are any indication, we can expect strong figures. Looking ahead, the next week will be crucial for the US Dollar, with the 14th marking the latest and perhaps most significant interest rate decision of the year. It is highly likely that the trends observed over the next two weeks will shape the trajectory of the USD for the remainder of the month.

The outlook appears promising for the Pound, as it makes significant gains against its major competitors, particularly the JPY, NOK, and CNY. This trend is expected to continue until at least the end of the year, providing ample opportunities for buyers to secure favourable rates.