The pound tumbled yesterday after the Bank of England (BoE) forecast a UK recession beginning in the fourth quarter of this year.
Meanwhile, trade in the pound is mixed this morning, with GBP/EUR buoyed at €1.1914 and GBP/USD muted at $1.2508. GBP/CAD is rangebound at C$1.6110, while GBP/AUD retreats to AU$1.7652 and GBP/NZD climbs to NZ$1.9485.
Looking ahead, will another fall in Eurozone unemployment help to buoy demand for the euro this morning?
What’s been happening?The euro was left subdued at the end of last week, as the latest Eurozone GDP figures reported growth in the bloc unexpectedly slowed in the first quarter.
This offset the accompanying consumer price index, which reported Eurozone inflation climbed to a new record high in April and may have otherwise helped to underpin the single currency.
The euro softened again on Monday after a surprise fall in Eurozone Economic sentiment last month, pushing the EUR/USD exchange rate back towards a 20-year low.
The pound, meanwhile, benefitted from a market correction on Friday, as GBP investors bought the dip following a persistent selloff earlier in the week.
This same market correction left the US dollar on the defensive at the end of last week as investors booked their profits in the wake of a weaker-than-expected core PCE price index.
However, USD exchange rates were quick to bounce back at the start of this week amid a risk-off mood following the European flash crash on Monday.
What’s coming up?The focus at the start of today will be on the Eurozone’s latest jobs report, where another fall in unemployment in the bloc could help to bolster the euro.
EUR investors will also look to a speech by European Central Bank (ECB) President Christine Lagarde for impetus today. If Lagarde appears receptive to some of the more hawkish comments made by her colleagues in recent weeks then EUR exchange rates could strengthen.
The publication of the latest US factory order figures will be the primary focus for USD investors today. Will a rebound in order growth in March help to buoy the US dollar ahead of an expected Fed rate hike tomorrow?
Meanwhile, in the absence of any UK data, movement in the pound could be limited today, particularly as GBP investors are likely to be reluctant to make any aggressive bets ahead of the Bank of England’s (BoE) upcoming interest rate decision.
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)