22/07 – Watch out for Frankfurt

Jeremy Thomson-Cook
Jeremy Thomson-Cook 22 July 2021

GBP: BOE speech at 09.30

EUR: ECB meeting all important at 13.30

USD: Steady declines


Another day of recovering risk appetite allowed sterling to move higher against both the euro and US dollar yesterday with a speech from Bank of England Deputy Governor Ben Broadbent this morning also expected to boost the pound. He speaks at 09.30.

UK retail sales are due tomorrow morning and may further add support.


It’s European Central Bank day today. Typically the July meeting is a bit of a non-event with both journalists and policymakers eager to leave Frankfurt in favour of somewhere warmer and sandier. Following the clarification of the ECB’s strategy a fortnight ago, today’s meeting has added importance for the single currency.

There will be no change in policy this afternoon but if the Bank’s focus is uncertainty – on growth, inflation, Covid-19 – then you would have to say that the likelihood remains that the euro weakens through today’s session.

Monday’s move lower is looking more and more like a wobble than a crash and any optimism seeping back into markets will see the euro resold as those carry trades reopen.


After Monday’s run higher in the dollar caused by uncertain markets, a little bit of stability has come through in the past 24hrs, driven by opportunism more than anything. As we noted yesterday, some will see the move on Monday as a correction and some will see it as a harbinger of things to come.

With an ECB meeting tomorrow that should be broadly risk supportive, we will need to see another strong move in US bond yields in our opinion for dollar to strengthen again from here.


Eyes will fall on the South African Reserve Bank today following weeks of rioting and rate rises from country’s in a similar situation – Brazil, Russia, Mexico – in previous weeks. We are not looking for the SARB to up its inflation expectations anytime soon and with its hand steady on interest rates, and the likelihood that growth will be revised lower thanks to the civil unrest, we can see ZAR continuing to weaken in the next few months.

Market rates

Today’s Interbank Rates at 09:36 against sterling. Movement vs yesterday.

Euro €1.164 
US dollar $1.372 
Australian dollar $1.861 
South African rand R19.96 
Japanese yen ¥151.6 

Have a great day.