The euro tumbled on Thursday following the publication of some disappointing Eurozone PMIs.
Meanwhile, the pound opens today’s session on firm footing, with GBP/EUR stable at €1.1650 and GBP/USD climbing to $1.2299. GBP/CAD is rangebound at C$1.5882, while GBP/AUD and GBP/NZD tick up to AU$1.7621 and NZ$1.9359, respectively.
Looking ahead, the continued absence of high-impact economic data could leave currency markets to be driven primarily by risk appetite today.
The euro was subdued yesterday amidst concerns over political paralysis in France after President Emmanuel Macron's party lost its majority in parliament.
What’s been happening?
European Central Bank (ECB) President Christine Lagarde’s testimony in front of the European Parliament further suppressed movement in the single currency as she reiterated the bank’s plans to raise interest rates by only 25bps in July.
The pound initially edged higher at the start of this week, with the increasingly risk-sensitive currency being underpinned by cautious optimism.
However, Sterling then wavered in the wake of comments from Bank of England (BoE) policymaker Catherine Mann in which she suggested that a weak pound bolsters the case for the bank to pursue a 50bps interest rate hike.
Finally, USD exchange rates traded sideways on Monday as the closure of US markets for the Juneteenth holiday resulted in thin trading conditions in the US dollar.
With notable economic releases still thin on the ground today, movement in the currency market may continue to be influenced by investor sentiment.
What’s coming up?
The euro could face an uphill battle as Russia’s throttling of European gas exports stokes fears of potential energy shortages on the continent this winter.
Across the pond, the reopening of US markets following the long weekend could help to revive demand for the US dollar, particularly if global recession fears continue to grow.
In the meantime, the pound could be influenced by the publication of the Confederation of British Industry’s order book balance. Will a dip in the CBI’s industrial orders index this month weaken Sterling?
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)