EUR/USD spikes to $1.18 following ECB rate decision

The euro traded erratically on Thursday, after the European Central Bank (ECB) concluded its latest policy meeting.

Meanwhile, the pound is trading in a narrow range so far this morning, with GBP/EUR flat at €1.1683 and GBP/USD muted at $1.3755. GBP/CAD is rangebound at C$1.7288, while GBP/AUD and GBP/NZD hold steady at AU$1.8658 and NZ$1.9714 respectively.

Looking ahead, will some positive UK data releases help to propel Sterling higher today?
 

What’s been happening?

The euro traded in a wide range yesterday, in response to the ECB’s latest policy decision, which saw the bank leave its monetary policy unchanged.

While the ECB struck a slightly less dovish tone than initially feared, the resulting upswing in EUR exchange rates proved short lived, as the bank’s new forward guidance indicates that interest rates are likely to remain on hold for years to come.

The pound, meanwhile, enjoyed robust support through Thursday’s session as GBP bulls appeared willing to overlook concerns regarding the UK’s ‘pingdemic’ crisis.

At the same time, the US dollar trended lower in European trade yesterday, with USD exchange rates falling in tandem with US Treasury yields.
 

What’s coming up?

Kicking off today’s session was the publication of the UK’s latest retail sales figure, which look to offer GBP exchange rates an initial boost after reporting a stronger-than-expected rebound in sales growth last month.

However, it remains to be seen if the pound can maintain these gains, with the impending release of the UK’s PMI releases, forecast to show a modest slowing of private sector activity this month, in spite of England fully reopening.

Conversely, the publication of the Eurozone’s own PMIs could help to propel the euro higher this morning, on the expectation that growth in the bloc’s service sector will have accelerated again in July.

While not as influential as the ISM figures, the US Markit PMI releases could also influence the US dollar this afternoon. Will a robust expansion of the US private sector at the start of the third quarter help ESD exchange rates to rebound today?