A renewed sense of political anxiety gripped the pound ahead of the weekend as the Conservative leadership contest came down to its final two candidates.
- Weaker wage growth would limit pound demand
- Euro looks for boost on improved Eurozone sentiment
- US dollar benefits from escalating global trade tensions
Pound vulnerable to slowing UK wage growth
Confidence in the resilience of the UK economy could take a blow this morning if March’s UK average weekly earnings data fails to impress.
Signs that domestic wage growth is slowing would leave GBP exchange rates vulnerable to fresh selling pressure, with weaker wages likely to lead to lower levels of consumer spending.
On the other hand, another bout of strong wage growth may encourage investors to maintain a more positive outlook on the UK economy.
As long as MPs remain at odds over how to proceed on the issue of Brexit, though, any pound boost could prove short-lived.
Improved Eurozone economic sentiment to shore up euro
Forecasts point towards a modest improvement in May’s Eurozone ZEW economic sentiment survey, offering EUR exchange rates a potential boost this morning.
If confidence within the German and wider Eurozone economies shows signs of strengthening the mood towards the single currency is likely to improve.
As global trade tensions continue to mount any evidence of improved sentiment within the Eurozone economy could help to keep the euro on a stronger footing.
Any fresh deterioration in domestic sentiment, however, could see EUR exchange rates trending sharply lower across the board.
Trade tensions fail to weigh on US dollar
After the latest escalation in the US-China trade spat the appeal of the US dollar has improved, driven by the general increase in market risk aversion.
While another round of tariffs could have a detrimental impact on the US economy, with consumers already bearing the brunt of the trade dispute, this has had limited impact on USD exchange rates.
An improvement in the NFIB small business optimism index may encourage the US dollar to extend its gains further this afternoon, with forecasts pointing towards a modest uptick.
Signs of optimism within the US economy would offer additional support to USD exchange rates, further diminishing the negative impact of trade concerns.
Tuesday, 14th May 2019
09:30 GBP Average Weekly Earnings
10:00 EUR Eurozone ZEW Economic Sentiment Survey
11:00 USD NFIB Small Business Optimism
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)