The pound was on the back foot yesterday against its major counterparts; with recent gains against both the shared currency and green back being erased. The most significant loss was against the euro, with a loss of over 1.3% recorded throughout the London session.

The losses across the board can be attributed to unexpectedly poor retail sales last month. The retail sales data indicated a drop to 0.2% in the month of June following the 0.3% gain witnessed the previous month. The majority of market participants were expecting a gain of 0.4%.

However, some good news came in the way of UK car exports, which showed the sector’s best half-year number since 2008, with 794,000 cars rolling off the production lines between January and June of this year, 0.3% better than 2014. This formerly written-off sector has proven to be a leader in productivity and successfully shrugged off the negative impact the industry faced after the collapse of Rover 10 years ago.

Elsewhere, US president Barack Obama has stated that the UK must stay in the European Union in order to continue to have influence on the World stage. With David Cameron promising a referendum on whether or not to remain a member of the EU held by the end of 2017, this latest rhetoric could have lasting implications for the UK as a world power should the decision be taken to leave the EU.

In terms of fundamental releases out of the UK today there is very little to report; market movements will therefore be as result of releases from across the pond and from within the European bloc.

The euro had another positive day strengthening over 0.9% against the pound, offering the best rate of the week at 1.4109 (IB). This was largely due to the effects of the second bailout agreement being reached trickling into the market. Tsipras appears to be fully committed to the new measures stating Greece must adapt to the new situation or face a disorderly default. The closer Greece draws to a final conclusion to its bailout, the stronger the euro will be in the short-term.

However, despite the positivity, as hinted before by Spain, Italy is now beginning to show signs of a possible contagion effect. The head of Italy’s second largest party stated Rome should “abandon the anti-democratic straight jacket of the euro”. If the parties such as Podemos and Five Star Movement further increase their popularity and spread their ideas, the euro could find itself in a very weak position. The European Union and commission could find their own credit being used against them as leverage to change austerity measures.

Today sees manufacturing and services releases from France, Germany and the eurozone out this morning and any fall in these numbers could push a retracement of the euro strength seen over the last 24 hours.

The dollar remained at one week lows against a basket of major currencies yesterday, reaching the lowest level since July last year. This was despite data showing that US jobless claims fell to the lowest level since November 1973 last week. The Department of Labor reported that the number of individuals filing for initial jobless benefits fell by 26,000 to 255,000, a large revision from analysts’ expectations of 280,000.

Whilst the dollar traded 0.6% higher against Sterling, the majority of these gains came as a result weaker than expected retail sales figures from the UK. Progress on the Greek debt front seems to have simultaneously given support to the euro and other riskier assets which have also weighed on the dollar value. EUR/USD ended the day 0.65% higher just above 1.10 (IB).

Today we have manufacturing PMI data out at 14.45, as well as New Home Sales data out at 15.00.

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