The pound traded with modest gains on Friday as GBP investors reacted to the latest UK GDP release.
Meanwhile, the pound is trending higher so far this morning, with GBP/EUR stable at €1.1728 and GBP/USD buoyed at $1.3867. GBP/CAD and GBP/NZD have ticked up to CA$1.7547 and NZ$1.9482 respectively, while GBP/AUD has soared to AU$1.8879.
Coming up, will a strong US inflation reading bolster the US dollar later this afternoon?
What’s been happening?The US dollar opened this week on strong footing as the prevalence of a risk-off environment saw investors favour the safe-haven currency.
This came amidst concerns that US inflation may remain elevated at a time when the wider US economic recovery looks to be slowing.
Also dampening the market mood to the benefit of the ‘greenback’ was China’s latest tech crackdown, as Beijing announced plans to break up Alipay, fuelling additional uncertainty over the world’s second largest economy.
The euro’s strong negative correlation with the US dollar, alongside growing uncertainty over Germany’s upcoming general election resulted in the single currency sliding through Monday’s trading session.
At the same time, trade in the pound was mostly flat yesterday, following reports that Boris Johnson will rule out any additional lockdowns when he announces his winter coronavirus plan later today.
What’s coming up?Centre stage today will no doubt be the publication of the US consumer price index.
This could send the US dollar even higher as concerns over inflation could be exacerbated if August’s CPI figures print above expectations.
In the meantime, the release of the UK’s latest jobs report may offer some support to the pound today, after reporting the domestic unemployment rate continue to fall in July, while wage growth also continued to rise at an accelerated pace.
GBP investors will also be keeping an eye out for Boris Johnson’s press conference later in the day, when he will publish his winter coronavirus plan.
Meanwhile, in the absence of any notable EUR data releases, the euro could struggle to attract support today, particularly if the US dollar continues its bullish run.
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)