As market anxiety over the Covid-19 pandemic lingered the Australian and New Zealand dollars struggled to find any major degree of traction, especially in the face of a resilient US dollar.
Sterling appears to be consolidating these gains this morning, with GBP/EUR stable at €1.2039 and GBP/USD flat at $1.3004. GBP/CAD is rangebound at C$1.7209, while GBP/AUD and GBP/NZD hold steady at AU$1.9421 and NZ$2.0331 respectively.
Coming up, the focus this morning will be on the UK’s consumer price index (CPI), Will a rebound in inflation help to buoy GBP exchange rates today?
What’s been happening?
The pound was back on the offensive yesterday, after it was announced the UK government would be sticking to its plans to publish its long awaited budget on 11 March.
Having been postponed once already in the run up to last year’s general election, GBP investors had feared that it could be delayed again following the shock resignation of Sajid Javid as Chancellor late last week.
GBP investors are hoping under the new Chancellor Rishi Sunak, the Treasury will be willing to give the government a little more leeway, allowing for some more ambitious spending by the government.
However, Sterling gains were still capped somewhat on Tuesday by the release of the UK’s latest employment report, after domestic wage growth was shown to have slumped to just 2.9% in December.
The US dollar also trended higher on Tuesday, with the safe-haven ‘greenback’ enjoying robust demand amidst rising panic over the coronavirus outbreak in China.
Meanwhile, the euro fell back yesterday, coming under pressure after the latest ZEW surveys revealed economic sentiment in Germany and the wider Eurozone took a dive this month due to concerns over the coronavirus.
What’s coming up?
In the spotlight today we have the publication of the UK’s consumer price index.
Economists forecast that inflation will have rebounded from a three-year low in January, but with it still trending well below the Bank of England’s (BoE) target range will this be enough to buoy the pound?
In the US the publication of the minutes from the Federal Reserve’s latest policy meeting will be watched closely by USD investors, with the US dollar likely to stumble if policymakers should come across as dovish.
In the absence of any fresh impetus, the euro is likely to remain vulnerable to further losses today, as markets remain wary about the health of the Eurozone economy.
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)