Trade in the pound was erratic on Thursday after the Bank of England (BoE) disappointed with a 50bps rate hike.
The pound is starting to soften this morning, after rising overnight. GBP/EUR is slipping to €1.1829, and GBP/USD is edging down to $1.2554. GBP/CAD has wobbled lower to C$1.6062, while GBP/AUD and GBP/NZD have dropped to AU$1.7674 and NZ$1.9417, respectively.
For the single currency this morning, Germany’s latest business climate indicator could provide some support. Business confidence in Europe’s largest economy unexpectedly improved this month.
The pound posted only modest gains on Friday, despite some stellar retail sales data out of the UK. Rather than contracting 0.2%, as was expected, UK sales rose by 1.4%.
What’s been happening?
However, economists were quick to point out that the surprise rise was driven by food store sales, suggesting people are staying at home more. This could potentially mean lower service-sector activity.
The euro headed lower at the end of the week as EUR investors awaited the eurozone's latest consumer confidence report.
Although the report marginally beat forecasts, morale remains near March’s 22-month low.
The US dollar was initially subdued on Friday as the ‘Greenback’ licked its wounds following Thursday’s sell-off.
USD did manage to scrape together some gains towards the end of the session, however, as it attracted modest dip-buying.
The euro could enjoy a slight lift this morning after Germany’s unexpected improvement in business confidence.
What’s coming up?
Today is also the first day of the World Economic Forum in Davos. Some comments coming out of the event could potentially impact global risk appetite.
There’s no data out from the UK today, so GBP exchange rates may trade primarily on domestic issues, such as the cost-of-living crisis and the Northern Ireland protocol dispute.
Similarly, US data is thin on the ground. As a result, risk appetite may drive most movement in the safe-haven US dollar.
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)