FX DAILY | 29.07.2019 | Marc-André Fongern

CURRENCY INSIGHTS - 29.07.2019 | MAF Global Forex

BREXIT - GBPUSD : Sterling continues to be burdened by a hypothetical no-deal scenario, which is certainly nothing new. Boris Johnson's approach isn't surprising either. As a result, we expect the currency to recover slightly during the summer recess. The British pound is being whipped almost incessantly these days. And once again, the renewed depreciation of the currency is mainly based on scaremongering. Basically, Boris Johnson's hands are tied, while his political options remain rather restricted. Unsurprisingly, the British currency remains rather dispirited, mainly due to the ongoing political mayhem. But wasn't Boris Johnson's strategy to be expected? His political opponents might cause him considerable problems after the summer recess.

FED - USD : Although a rate cut by the Federal Reserve next Wednesday appears to be a done deal, we don't expect the dollar to depreciate sharply. Several central banks are set to maintain their ultra-loose monetary policy throughout the coming months. Donald Trump has been putting pressure on the Federal Reserve for several months now. This might probably be the primary reason for one of the most controversial rate cuts in recent decades. Jerome Powell's basically sitting on a powder keg, to be honest. As things stand now, there are virtually no rational reasons to loosen monetary policy this year, unless one assumes a further intensification of the trade conflict. Hence, the impending rate cut could eventually be interpreted as a precautionary move. EURUSD - As the downward trend of the European economy seems likely to remain intact, especially against the background of an ongoing trade dispute, we expect an even weaker euro within the next 2 months. The ECB is obviously gearing up for a marathon, not a sprint.

STAY TUNED...