The pound initially appeared to be in a strong position last week, with the currency firming through the start of the session, amidst an upbeat market mood.
Meanwhile the pound is mostly rangebound so far this morning, with GBP/EUR flat at €1.1705 and GBP/USD muted at $1.3901. GBP/CAD is holding steady at C$1.7394, while GBP/AUD and GBP/NZD slump to AU$1.8794 and NZ$1.9805 respectively.
Coming up, will a slowing of US factory order growth temper demand for the US dollar this afternoon?
What’s been happening?The euro got off to a solid start this week, initially appreciating on the back of Germany’s latest retail sales release, following a stronger-than-expected expansion of dales growth in June.
This upside in EUR exchange rates was then reinforced by the publication of the Eurozone’s latest manufacturing PMI, after July’s finalised figures reported a larger-than-expected expansion of growth in the bloc’s factory sector.
The pound, meanwhile, was mostly rangebound on Monday, with the UK’s own manufacturing PMI printing in line with expectations.
While optimism over the UK’s current coronavirus situation offered some support to Sterling, any upside potential in the pound remained limited ahead of the Bank of England’s (BoE) upcoming interest rate decision.
At the same time, the US dollar found itself on the defensive yesterday as a prevailing risk-on mood sapped safe-haven demand.
Further undermining the appeal of the ‘greenback’ was the latest ISM manufacturing PMI, which unexpectedly printed at a six-month low in July.
What’s coming up?Looking ahead, today’s most impactful data release looks to be the publication of the latest US factory orders figures.
June’s release is expected to report a modest slowing of order growth, which could translate into some headwinds for the US dollar this afternoon.
USD investors will also look to a speech by the Federal Reserve’s Richard Clarida for additional impetus. Will some dovish comments from Clarida further undermine the ‘greenback’?
In the meantime, the Eurozone’s PPI release could limit the appeal of the euro this morning as producer price growth is forecast to have slowed in June.
Finally, in the absence of any notable GBP data, any movement in the pound today, looks likely to be driven by domestic coronavirus developments.
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)