The pound ticked higher on Thursday, firming in response to the UK government announcement of a new job support scheme.
Meanwhile, the pound continues to struggle for direction this morning, with GBP/EUR flat at €1.1072 and GBP/USD muted at $1.3090. GBP/CAD is subdued at C$1.7378, while GBP/AUD and GBP/NZD are holding steady at AU$1.8200 and NZ$1.9695 respectively.
The focus today is likely to be on the latest ISM non-manufacturing PMI. Will another robust expansion of the US service sector help extend the US dollar’s recovery?
What’s been happening?
The US dollar ticked higher through yesterday’s European session amid a souring of market sentiment.
This came on the back of uncertainty regarding the next round of US coronavirus stimulus as well as growing concerns over the recent resurgence in coronavirus cases around the globe.
Further buoying the appeal of the ‘greenback’ was a stronger-than-expected reading in the latest US factory order figures.
This uptick in the US dollar was reflected by limited demand for the euro due to the negative correlation in the pairing, with the euro only prevented from registering more substantial losses in light of a better-than-forecast Eurozone PPI print.
Meanwhile, the pound was forced to retreat yesterday, with talk of a potential lockdown in London as well as concerns over the UK’s deteriorating international relations weighing on Sterling sentiment.
What’s coming up?
The US dollar could extend gains today if the latest ISM non-manufacturing PMI confirms that the US service sector expanded in line with expectations again last month.
Also of note to USD investors will be the latest ADP employment report. Analysts are predicting another sharp rise in employment growth as more Americans returned to work. However, the recent flare ups in coronavirus cases in parts of the US could result in a smaller-than-expected rise.
In the Eurozone the publication of the bloc’s latest retail sales figures may prove supportive for the euro as sales growth is forecast to have recovered further in June.
Finally, the pound may look to recoup some of its recent losses today as July’s finalised PMI figures are expected to confirm UK business activity surged to a five-year high.
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)