The pound plummeted on Tuesday as the latest UK PMIs printed well below expectations.
Meanwhile, trade in the pound is mixed so far this morning, with GBP/EUR buoyed at €1.1805 and GBP/USD stable at $1.3369. GBP/CAD is rangebound at C$1.7143, while GBP/AUD and GBP/NZD are subdued at AU$1.8494 and NZ$1.9569, respectively.
Looking ahead, will some upbeat US data releases help USD exchange rates rebound today?
The US dollar was placed on the defensive through yesterday’s trading session as an improving market risk appetite limited demand for the safe-haven ‘greenback’.
What’s been happening?
This pullback in the US dollar came in spite of the latest US GDP figures revising domestic growth higher than previously estimated in the third quarter.
The weakness of USD exchange rates helped to limit the losses of the euro on Wednesday, which otherwise struggled to attract support as more European countries announced plans to tighten Covid restrictions.
At the same time, the pound was able to strengthen against both the euro and US dollar yesterday, amidst relief that the UK government won’t be introducing any additional restrictions this side of Christmas.
However, these gains were tempered somewhat by the publication of the UK’s own GDP report, after growth in the third quarter was revised lower.
Turning to today’s session, we have a final blast of data before the Christmas break, the most impactful of which is likely to be the latest US durable goods release.
What’s coming up?
Today’s figures are expected to report goods order growth rebounded sharply in November, which may help the US dollar to claw back some of its recent losses.
Also of note will be the latest PCE price index, which could also reflect positively on USD exchange rates as it is expected to confirm the surge in US inflation last month.
In the meantime, speculation over the UK government’s plans for post-Christmas restrictions could limit the upside potential of the pound through the second half of this week.
The euro faces a similar predicament as the imposing of stricter restrictions in many parts of Europe is likely to undermine EUR sentiment.
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)