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British Pound (GBP) Forecast: New Quarter Carries Over GBP Pressures


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Jul 1, 2022 | DailyFX
Warren Venketas, Analyst

POUND STERLING TALKING POINTS

  • EUR and USD favored against GBP.
  • Spotlight on U.S. and EU economic data.

Sell GBP/USD Say JP Morgan, UK Economy Vulnerable


GBP FUNDAMENTAL BACKDROP

Pound sterling is having a tough time this week against the U.S. dollar and euro respectively. The ECB Sintra Forum saw the Federal Reserve via Jerome Powell surprise markets on the hawkish side thus boosting the dollar . Yesterday, Russia withdrew troops from Ukraine as a “gesture of goodwill” leaving the euro bid in conjunction with looming ECB rate hikes to quell inflationary pressures in the eurozone. These fundamental headwinds left the pound weaker while UK economic data showed housing prices slipping in the month of June.

Brexit developments may also play a role in the pound although up until now we have not seen significant reactions within GBP crosses.

To close off the week, eurozone core inflation and U.S. ISM Manufacturing PMI will be in focus. Eurozone core inflation is estimated to come in higher than the previous release which could support further EUR upside. ISM data on the other hand is forecasted lower and could play into the hands of an already fearful market with regards to an impending recession.

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