The pound trended broadly lower through June, the currency being primarily undermined by concerns over the UK’s economic trajectory.
Meanwhile, trade in the pound is mixed again this morning, with GBP/EUR climbing €1.2101 and GBP/USD slipping to $1.325. GBP/CAD is rangebound at C$1.6908, while GBP/AUD and GBP/NZD retreat to AU$1.8128 and NZ$1.9540, respectively.
Looking ahead, will a robust US payroll print distract markets from the crisis in Ukraine and propel the US dollar higher?
The euro continued to trend lower yesterday. Concerns over Europe’s energy security due to the war in Ukraine kept the pressure on EUR exchange rates.
What’s been happening?
The single currency’s losses during the European trading session were much more modest compared with earlier in the week, amidst some cautious optimism regarding a second round of Russian-Ukrainian peace talks.
However, reports of a fire breaking out at the Zaporizhzhia nuclear plant following shelling from Russia forces then extended the euro’s losses overnight.
The pound also struggled to attract support on Thursday, amidst concerns the war in Eastern Europe will stoke inflationary pressures and exacerbate the UK’s cost-of-living crisis. A downwards revision to the UK’s services PMI in February further limited GBP demand.
Persistent safe-haven demand helped to underpin the US dollar again on Thursday, however, an unexpectedly weak ISM non-manufacturing PMI capped the US dollar’s gains through the second half of the session.
Turning to today’s session, some high-impact US data could turn some attention away from the war in Ukraine today.
What’s coming up?
The US will publish its latest non-farm payroll figures this afternoon, which is expected to report the US economy added another 400,000 jobs last month.
Another robust payroll print could buoy the US dollar as it may be seen as allowing the Federal Reserve to pursue a more aggressive approach to monetary tightening.
In the meantime, the Eurozone’s latest retail sales figures are forecast to show a rebound in sales growth at the start of 2022, but given the euro’s extreme sensitivity to the situation in Ukraine, any chance of EUR exchange rates strengthening looks extremely slim.
Meanwhile, with GBP data releases thin on the ground the pound may struggle to find momentum today.
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)