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GBP/USD breaks through to $1.34, could a new two-high be in sight?

currency-newsGBP/USD breaks through to $1.34, could a new two-high be in sight?
The GBP/USD exchange rate is off to a flying start this week, smashing through the $1.34 barrier after making some convincing gains at the end of last week’s session.

Sterling is mostly rangebound so far this morning, however, with GBP/EUR flat at €1.1193 and GBP/USD buoyed at $1.3403. GBP/CAD is muted at C$1.7437, while GBP/AUD and GBP/NZD hold steady at AU$1.8127 and NZ$1.9825, respectively.

Coming up, the focus will be on the ISM manufacturing PMI today. Will a bump in US factory growth lend some strength to the US dollar later this afternoon?

What’s been happening?

Trade in the pound was mixed at the end of last week’s session, as market responded to some dovish comments from Bank of England (BoE) Governor Andrew Bailey in his keynote speech at the Federal Reserve’s Jackson Hole Summit.

Bailey made it clear that the BoE remains cautious in its outlook amidst the current elevated levels of uncertainty, highlighting that its ultra-loose monetary policy is likely to remain in place for some time and that the bank is not ruling out the possibility of negative interest rates.

The euro, meanwhile, was laid low on Friday amidst rising concerns over Europe’s coronavirus resurgence as a number of countries including France and Germany began to tighten restrictions once more.

Finally, the US dollar fluctuated at the end of last week’s session as initial losses driven by concerns over the Fed’s change to inflation targets were offset by some upbeat US data releases.

What’s coming up?

In the spotlight today is the publication US ISM manufacturing PMI.

This afternoon’s release could put a spring in the step of the US dollar, if August’s figures show that activity in the US factory sector continued to improve.

In focus for EUR investors today will be the publication of the Eurozone consumer price index (CPI). Will a slowing of inflation drag on the euro? 

Also of note for EUR investors today will be the latest Eurozone unemployment report, where an expected rise in unemployment in July could weaken EUR exchange rates.

Meanwhile, GBP Investors will look to today’s manufacturing PMI release for confirmation that UK factory growth struck a two-year high last month.
 
Philip McHugh

Philip McHugh

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)

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