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Ongoing political uncertainty drags pound lower

business-articlesOngoing political uncertainty drags pound lower
  • Brexit speculation to keep pound under pressure
  • US tariffs and trade worries to boost US dollar
  • Canadian dollar muted ahead of jobs data
Crunch cabinet Brexit meeting to drive pound movement
Brexit-based uncertainty is likely to dominate the outlook of the pound today, with Theresa May’s cabinet meeting for crunch talks.
With ministers still clearly at odds over the likely shape of the UK’s future relationship with the EU doubts remain over the likelihood of the cabinet adopting a unified position any time soon.
As businesses have continued to warn over the negative impact of a hard Brexit deal, as well as the persistent uncertainty, GBP exchange rates looks set to remain rather muted.
Nevertheless, any steps towards a breakthrough and progress towards a finalised Brexit deal could help to shore up the pound ahead of the weekend.
US dollar likely to gain as US-China tariffs come into effect
Although demand for the US dollar cooled somewhat yesterday USD exchange rates are unlikely to remain on a weak footing for long.
The implementation of US and Chinese import tariffs could encourage a fresh bout of market risk aversion today, driving up the safe-haven USD.
Focus will also fall on the latest US non-farm payrolls report, with the headline figure expected to show a slight decline on the month.
If the US labour market appears to have run out of slack this could put fresh pressure on the US dollar.
Canadian dollar volatility forecast on jobs data
Confidence in the Canadian dollar could weaken further this afternoon if June saw wage growth falter as forecast.
While the net change in employment is expected to show an improvement on the month this could easily be overshadowed by any signs of slowing wages.
Even so, an uptick in the participation rate may encourage greater optimism in the Canadian economy, giving the Bank of Canada (BOC) fresh cause for confidence.
Oil prices remain high, with a barrel of WTI crude trading at $73.11, but they have shown signs of weakening in recent days and if they continue to fall this could also drag CAD exchange rates lower in the near term.
Upcoming Data

13:30 - CAD - Unemployment Rate
13:30 - USD - Change in Non-Farm Payrolls
Philip McHugh

Philip McHugh

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)

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