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Pound under pressure, UK productivity declines

business-articlesPound under pressure, UK productivity declines
  • Drop in UK productivity weighs on pound
  • Strong jobs report boosts US dollar
  • New Zealand dollar struggles to find support
 
 Pound vulnerable to political jitters
 
The pound came under fresh pressure ahead of the weekend as UK labour productivity contracted -0.2% in the first quarter of 2019.
 
With businesses holding off on investment as a result of persistent Brexit-based uncertainty productivity continued to stall, raising fresh concerns over the economic outlook.
 
Demand for the pound may remain limited today unless there is a significant shift in the political mood.
 
 
Weaker consumer credit may dent US dollar
 
Friday’s US non-farm payrolls report gave the US dollar a solid boost by beating expectations with a sharp increase in jobs on the month.
 
Although this is unlikely to be enough to keep the Federal Reserve from cutting interest rates again sooner rather than later, the data still offered USD exchange rates a leg up.
 
The mood towards the US dollar could sour this afternoon, however, if May’s consumer credit figure shows a deterioration.
 
Evidence of a weaker level of confidence within the US economy would leave USD exchange rates vulnerable to renewed selling pressure.
 
 
Resilient economic activity to boost New Zealand dollar
 
A weaker level of market risk appetite helped to limit the appeal of the New Zealand dollar last week in the absence of any fresh domestic data.
 
However, NZD exchange rates could find a rallying point tonight if the ANZ truckometer picks up on the month.
 
An uptick here would suggest that economic activity continued to pick up in June, based on an increase in domestic traffic volumes.
 
If the New Zealand economy shows signs of resilience this would give investors greater incentive to favour the New Zealand dollar, with the risk of a Reserve Bank of New Zealand (RBNZ) rate cut declining.
 
 
Upcoming Data:
 
Monday, 8th July 2019
20:00 USD Consumer Confidence
23:00 NZD ANZ Truckometer
 
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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