The Pound (GBP) struggled to advance this morning as yesterday’s poor Services PMI continued to hang over currency markets.
The index fell from 53.8 to 53.4 in June, reaching a four-month low and capping of a trio of poor data for the UK with both the manufacturing and construction PMI’s also showing a slow down last month, with analysts predicting that the lacklustre data will hamper the UK’s second quarter growth prospects.
Meanwhile GBP investors are likely to be focused on a speech by Bank of England (BoE) Governor Mark Carney tomorrow, with markets hoping that he will elaborate on recent comments that the bank may be seeking to raise interest rates.
While the Pound Euro (GBP EUR) exchange rate initially pushed higher earlier this morning the single currency was able to rally following Germany’s latest factory order figures.
After contracting at the start of the second quarter investors were pleased to see that orders rebounded in May, although not quite as spectacularly as analysts had predicted.
Meanwhile the Euro may be met by some volatility later today, as the European Central Bank (ECB) releases the minutes from its most recent policy meeting, with markets looking out for any signs that the bank is preparing to tighten monetary policy after hawkish comments from ECB President Mario Draghi last week.
After striking a new weekly low against the US Dollar (USD) yesterday Sterling was able to trend slightly higher overnight as the Federal Reserve’s policy minutes did little to indicate another rate hike was likely this year.
The minutes showed that Fed policymakers are increasingly split over the further tightening of monetary policy, with many citing a lacklustre inflation outlook as a reason to abstain from raising interest rates any further.
The ‘Greenback’ may also weaken later this afternoon’ with the latest US jobs figures expected to show that the private sector added fewer jobs in June.
The Pound Canadian Dollar (GBP CAD) exchange rate rallied from a ten-week low on Wednesday as the ‘Loonie’ was crippled by a 4% drop in oil prices, however with little data to support its rise, Sterling found itself tumbling back again earlier this morning.
Falling risk appetite allowed Sterling to advance against the Australian Dollar (AUD) yesterday despite the UK’s lacklustre services PMI, however the ‘Aussie’ began to push back earlier this morning following a better than expected jump in Australia’s trade surplus.
New Zealand Dollar
The Pound New Zealand Dollar (GBP/NZD) exchange rate continues to fluctuate this week as a mix of poor economic data from the UK and markets becoming increasingly risk adverse prevents the pairing from stabilising.
This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
Last update: 22 Feb, 2020
The strong start to the year for “risk-on” currencies is already a distant memory.
Posted: 3 Feb, 2020
The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.
Last update: 8 Jan, 2020