The US dollar strengthened on Thursday as USD investors cheered the release of some stronger-than-expected US economic releases.
Sterling remains on the back foot this morning, with GBP/EUR muted at €1.0943 and GBP/USD slipping to $1.3283. GBP/CAD and GBP/NZD are subdued at C$1.6919 and NZ$1.8721 respectively, while GBP/AUD has fallen to AU$1.7581.
We can expect to see more Brexit-driven volatility in GBP exchange rates today, ahead of what looks to be the final weekend of trade talks.
What’s been happening?The pound experienced heavy selling pressure through yesterday’s trading session amid growing concern that the UK is hurtling towards a no-deal Brexit.
This followed Wednesday evening’s crunch meeting between Boris Johnson and European Commission President Ursula von der Leyen, which failed to deliver a breakthrough. Johnson later suggested there is a ‘strong possibility’ of a no-deal Brexit.
Further denting Sterling was the UK’s latest GDP figures, which showed a slowing of UK economic growth in October.
The US dollar also retreated on Thursday, undermined by coronavirus vaccine optimism and a shock surge in US initial jobless claims last week.
The euro, meanwhile, struck higher after the European Central Bank (ECB) concluded its latest policy meeting by expanding its stimulus programme by €500bn, as expected.
Also supportive of the single currency was the ECB’s decision not to address the current strength of EUR exchange rates, something which analysts speculated could happen as the Euro’s recent surge will make it more difficult for the bank to boost inflation.
What’s coming up?Turning to today’s session it seems safe to assume that investors are likely to remain extremely wary of the pound as the chances of a Brexit-breakthrough are looking increasingly slim.
At the same time, the euro may struggle to find support at the start of today’s session after data published earlier this morning confirmed that German consumer prices fell at the fastest rate in almost five years last month.
Closing out the session is the University of Michigan’s latest consumer sentiment index. It could send the US dollar lower if household confidence slipped in December as forecast.
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)