The pound plummeted on Tuesday as the latest UK PMIs printed well below expectations.
Sterling appears to have stabilised so far this morning, with GBP/EUR flat at €1.1687 and GBP/USD buoyed at $1.3382. GBP/CAD is rangebound at C$1.6836, while GBP/AUD and GBP/NZD hold steady at AU$1.8324 and NZ$1.9045 respectively.
Looking ahead, will an improvement in US consumer sentiment help to propel the US dollar higher this afternoon?
The pound initially weakened yesterday following the release of the UK’s latest GDP figures, after they revealed domestic growth slowed more than expected in the third quarter.
What’s been happening?
The Office for National Statistics (ONS) reported the UK economy grew by 1.3% in Q3, versus the 1.5% expansion forecast, and down from 5.5% in Q2.
However, Sterling was able to pare a good portion of these losses by the end of the European session.
The euro, meanwhile, traded sideways on Thursday as the European Central Bank’s (ECB) latest economic bulletin saw the bank acknowledge that current inflationary pressures will be longer lasting than forecast, but that they are still seen as being of a ‘temporary nature’.
At the same time, the closure of US markets for Veteran’s Day created thin trading conditions in the US dollar, leading it to trade without a strong directional bias during yesterday’s European trading session.
Turning to today’s session, the publication of the University of Michigan’s latest consumer sentiment index is likely to be the focus for USD investors, with another uptick in consumer morale potentially bolstering the US dollar.
What’s coming up?
Also influencing USD exchange rates will be the release of the US job opening and labour turnover survey (JOLTs), which is expected to report a small fall in openings, indicating some of the slack in the US labour market has eased.
For GBP investors the highlight today will be a speech from Bank of England (BoE) policymaker Jonathan Haskel, who could shed some light on whether the bank could still hike interest rates in 2021.
In the meantime, the euro could face some headwinds this morning as the Eurozone’s latest industrial production figures are expected to report another contraction of factory output across the bloc in September.
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)