The pound plummeted on Tuesday as the latest UK PMIs printed well below expectations.
The pound meanwhile, looks to be consolidating Wednesday’s gains this morning, with GBP/EUR ticking up to €1.1584 and GBP/USD buoyed at $1.2896. GBP/CAD has rallied to C$1.7290, while GBP/AUD and GBP/NZD are holding steady at AU$1.9465 and NZ$2.0449 respectively.
Looking ahead, all eyes will be on a public appearance by Bank of England (BoE) Governor Mark Carney today as investors remain eager to learn more about his outlook on monetary policy.
What’s been happening?
The euro took a dive on Wednesday in response to the news that the Italian government would be stepping up its efforts to contain the spread of the coronavirus in the country.
These measures included the shutting of all schools and universities, as well as a restriction on public events throughout the country.
Given the size of Italy’s outbreak the move appears timely, but it will do little to dispel fears that the resulting disruption will tip the country into recession this year.
Meanwhile, the pound rallied mid-week after incoming Bank of England (BoE) Governor Andrew Bailey suggested that more evidence would be needed before the bank takes action on monetary policy.
The US dollar also trended higher yesterday, rallying in light of increased demand for safe-haven assets as well as the latest ISM non-manufacturing PMI after it reported the US service sector expanded at its fastest pace in a year last month.
What’s coming up?
In the spotlight today will be a speech by outgoing BoE Governor Mark Carney.
Carney’s speech comes following previous speculation the BoE may look to follow the Federal Reserve’s lead in announcing an emergency rate cut this week in an effort to limit the economic impact of the coronavirus.
However, following Bailey’s intervention yesterday this is now in doubt, and markets will be looking to Carney for more clarity.
In Europe, the focus will be on how Eurozone members are planning to tackle the threat posed by the coronavirus, with EUR investors looking for concrete plans around fiscal stimulus.
Finally, the US dollar may give up some ground this afternoon as the latest US data is expected to report a slight contraction of US factory orders in January.
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)