GBP/EUR rate restricted as Brexit continues to dominate


Sterling continues to be pressured by domestic issues and worries about the government’s controversial Northern Ireland Protocol Bill which could trigger a trade war with the European Union.

Expectations that the Bank of England would decide to approach raising interest rates gradually amid the ongoing cost of living crisis further contributed to the GBP/USD pair’s steep decline. GBP/USD traded below 1.19 at three-week lows down 1.25%.

The British wholesale gas price for the day ahead of delivery jumped by 16% yesterday, raising the prospect of record breaking inflation rates and sharp economic slowdown.


The EUR/USD pair fell to its lowest level since 2002. The US dollar jumped as stocks plunged, reflecting market concerns.

S&P Global released the final versions of the EU June PMIs, which showed that growth across the EU slowed to a sixteen-month low. Services activity increased at a weaker rate, whilst goods production fell for the first time in two years. The data exacerbated recession fears, while inflation in the EU stands at record highs.

Meanwhile, German Economy Minister Robert Habeck noted that the energy industry crisis could have a domino effect on the market. He did not rule out intervening on gas prices. Since Russia curbed its gas flows to the country, Germany fears a complete blackout of Moscow’s provision, as Russia will temporarily shut down the Nord Stream-1 pipeline on July 11 for annual maintenance.


The dollar caught aggressive bids yesterday and rallied to a new two-decade high, which in turn was seen as a key factor that exerted heavy downward pressure on the GBP/USD pair. The Federal Reserve’s hawkish remarks about rate hikes to curb soaring inflation continued lending support for USD. Furthermore, global inflation fears provided an additional boost to the safe-haven greenback.

Key announcements

07:00 – EUR – German Factory Orders M/M (May) – Actual 0.1% vs Previous -1.8%
08:00 – EUR – Spanish Industrial Production Y/Y (May) – Actual 3.8% vs Previous 2.3%
08:00 – EUR – ECB Non-monetary Policy meeting
09:10 – GBP – BoE MPC Member Pill speaks
10:00 – EUR – EU economic forecasts
10:00 – EUR – Retail Sales Y/Y and M/M – Actuals 0.2%
14:45 – USD – Services PMI (Jun)
19:00 – USD – FOMC Meeting Minutes