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.
- Disappointing UK growth data dents pound
- US dollar downside limited thanks to global trade tensions
- New Zealand dollar looks for support from stronger retail spending
Pound vulnerable to easing wage growth
The pound came under renewed pressure at the start of the week as April’s monthly UK gross domestic product showed an unexpectedly sharp -0.4% contraction.
With the UK economy continuing to show signs of slowing in the face of ongoing Brexit-based uncertainty GBP exchange rates were left on the back foot.
Further weakness may be in store for the pound this morning on the back of the latest average weekly earnings data.
Evidence that UK wage growth continued to ease in the three months to April would give the Bank of England (BoE) incentive to remain on hold, further limiting the strength of GBP exchange rates.
US dollar braces for business optimism index
As forecasts point towards a fresh decline in the NFIB small business optimism index the US dollar could come under further pressure this afternoon.
A decline in business confidence would raise concerns over the ongoing impact of the Trump administration’s approach to trade and the dispute with China.
However, as investors have already largely priced in the impact of a 2019 Federal Reserve interest rate cut the US dollar could shrug off a negative reading here.
As long as anxiety over the global trade outlook persists the downside potential of USD exchange rates could prove limited.
Stronger retail spending may offer New Zealand dollar boost
After sliding yesterday the New Zealand dollar could find a rallying point on the back of tonight’s credit card spending figures.
An uptick in consumer spending in May could encourage a greater sense of confidence in the domestic outlook, suggesting a stronger level of economic activity in the second quarter.
Signs of domestic resilience may help to limit the negative bias of the risk-sensitive New Zealand dollar in the near term.
On the other hand, any slowdown in spending may put additional pressure on NZD exchange rates overnight.
Tuesday, 11th June 2019
09:30 GBP Average Weekly Earnings
11:00 USD NFIB Small Business Optimism Index
23:45 NZD Retail Card Spending
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)