The US dollar fell sharply on Monday as risk-on trade and falling US Treasury yields weighed heavily on the safe-haven currency.
Sterling appears to be mostly holding its ground so far this morning, however, with GBP/EUR flat at €1.1035 and GBP/USD buoyed at $1.3408. GBP/CAD is rangebound at C$1.7130, while GBP/AUD and GBP/NZD dip to AU$1.7977 and NZ$1.8943, respectively.
Coming up, will we see more Brexit anxiety infuse even more volatility into GBP exchange rates today?
What’s been happening?The pound stumbled again at the start of yesterday’s session, as the currency once again fell afoul of Brexit jitters.
This came in the wake of some uncharacteristic pessimism from UK prime minster Boris Johnson, who cast doubts on the chances of a UK-EU trade deal as he warned that reaching an agreement is ‘looking very, very difficult’.
However, the pound clawed back the majority of its losses through the second half of the European session following the news that the UK and EU had reached an agreement on the implementation of post-Brexit border checks in Northern Ireland, something which was seen as providing ‘positive momentum’ in trade talks.
The euro, meanwhile, faced some hurdles on Tuesday, after the Eurozone’s latest GDP estimate saw economic growth revised slightly lower in the third quarter, offsetting a better-than-expected improvement in German economic sentiment in December.
At the same time, the US dollar made modest gains through yesterday’s session as a dip in equity markets bolstered the safe-haven appeal of the ‘Greenback’.
What’s coming up?Kicking off today’s session was the publication of Germany’s latest trade balance figures, which may drag on the euro this morning following a narrowing of the country’s trade surplus in October.
Elsewhere the spotlight is likely to remain on Brexit, and as such we are likely to witness additional volatility in the pound today.
Of particular focus to GBP investors will be Boris Johnson’s meeting with European Commission President Ursula von de Leyen in Brussels, in a last-ditch attempt for the two sides to reach a deal, with the pound poised to plunge if the meeting fails to deliver a breakthrough.
Also, on the data calendar today will be the latest JOLTs job opening figures, with the US dollar potentially facing some headwinds if a fall in job openings raised additional concern about the state of the US labour market.
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)