The pound traded with modest gains on Tuesday, following the publication of the UK’s latest employment figures.
Sterling has fallen back slightly this morning, with GBP/EUR edging to €1.1824, GBP/USD trading at $1.3138, and GBP/CAD drifting to C$1.7324. GBP/AUD and GBP/NZD are trading at AU$1.9203 and NZ$2.0021 respectively.
Looking ahead, the focus today will be on the latest US payroll figures. Will an underwhelming employment report exert some pressure on the US dollar later this afternoon?
What’s been happening?
The pound continued to trend higher yesterday, but at a slower pace than earlier in the week.
The persistent strength in Sterling comes as investors move to price in a Tory victory at next week’s general election.
GBP investors hope a majority in parliament will allow Boris Johnson to ratify his EU withdrawal deal, offering some short-term clarity on Brexit.
Meanwhile, the euro traded sideways on Thursday in response to some disappointing economic data.
Both Eurozone retail sales and German factory orders unexpectedly contracted in October, reinforcing the fragile outlook for the bloc and any stifling demand for the single currency.
Finally, the US dollar languished at a four-week low through most of yesterday’s session, only finding some modest support towards the end of the day after US data revealed a rebound in factory orders in October.
What’s coming up?
All eyes will be on the US dollar today as markets brace for the release of the highly influential non-farm payroll figures.
Economists had been expecting a healthy bump in US employment growth last month, with forecasts that payroll numbers would rise from 128,000 to 180,000.
However, a particularly miserable ADP employment report earlier in the week has cast some doubts over this, suggesting the US jobs market may have slowed sharply last month.
Expect to see the US dollar tumble if payrolls also miss their mark.
Meanwhile, the euro may face some headwinds today after data published at the opening of the European session showed another drop in German industrial production in October.
For GBP investors the focus will remain firmly on UK politics, with the pound looking to close out the week on a high as long as the Tories don’t do anything to jeopardize their lead in the polls.
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)