The main news from the eurozone came towards the end of the week. As markets were still awaiting inflation figures from Germany, the view that broader eurozone momentum was starting to pick up was aided by the release of good French and Spanish inflation figures.
While the euro-sterling rate appeared to have stabilised somewhat, the euro ended the week slightly down against the pound. Sterling was relatively unmoved by the fact that the IMF cut the UK’s GDP growth forecast from 2% to 1.7% due to weaker activity. But midweek, second quarter GDP growth data actually edged up slightly from the previous quarter, and although it was shown to hit 0.3% it is still weak compared to many eurozone countries. Nonetheless, it helped sterling against the euro.
Earlier in the week, Trump’s proposed healthcare reforms appeared to be making some progress in Congress, although it failed to ignite any particular excitement around the dollar. The dollar is still a victim of what seems like Trump’s inability to push through key reforms, and later in the week the senate’s effort to pass a “skinny” repeal to Obamacare was voted against. As expected, there were no policy changes at the midweek Federal Reserve (Fed) meeting. While the signals around unwinding monetary stimulus were strong, the dollar still ended the week down against the euro.
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