The pound surged higher at the start of yesterday’s session, hitting two-week highs against the US dollar and the euro, after the UK’s latest labour market report surprised to the upside.
Meanwhile, Sterling is on the back foot so far this morning, with GBP/EUR slumping to €1.1969 and GBP/USD dipping to $1.3569. GBP/CAD is muted at C$1.6980, while GBP/AUD and GBP/NZD hold steady at AU$1.8853 and NZ$2.0170, respectively.
Coming up, will a disappointing UK retail sales reading see the pound close the week on a sour note?
The pound initially rallied again during yesterday’s European session, with the currency garnering support from reports suggesting a number of Conservative MPs have withdrawn their votes of no confidence in Boris Johnson.
What’s been happening?
However, subsequent reports suggesting Tory whips may be intimidating MPs by threating to cut funding for local constituents, saw Sterling row back most of these gains by the evening.
The euro, meanwhile, was left mostly directionless yesterday as European Central Bank (ECB) president Christine Lagarde stoked concerns over ECB policy divergence as she suggested ‘there are no reasons for us to act in the same way as the US Federal Reserve’ in raising interest rates.
At the same time, the US dollar was placed on the back foot on Thursday as a bullish market mood, coupled with an unexpected rise in US initial jobless claims last week, dented the appeal of the US currency.
Kicking off today’s session was the publication of the UK’s latest retail sales data.
What’s coming up?
This morning’s figures look likely to leave the pound on the defensive today, after reporting sales growth contracted a whopping 3.7% in December and raising concerns the UK economy may have slipped back to its pre-pandemic levels at the end of 2021 as Omicron sapped consumer sentiment.
EUR investors will look to a speech by Lagarde for fresh impetus of movement today. Expect the euro to weaken if Lagarde reaffirms the ECB’s dovish bias.
Finally in the absence of any notable USD data releases, the US dollar is likely to be sensitive to market sentiment thought the end of this week’s session, with the currency potentially weakening if a risk-on mood prevails.
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)