The US dollar fell sharply on Monday as risk-on trade and falling US Treasury yields weighed heavily on the safe-haven currency.
However, Sterling is struggling to extend this momentum today after giving up some ground yesterday evening, with GBP/EUR rangebound at €1.0981 and GBP/USD muted at $1.3332. GBP/CAD is flat at C$1.7012, while GBP/AUD and GBP/NZD hold steady at AU$1.7717 and NZ$1.8841, respectively.
Looking ahead, while Brexit will remain the focus of GBP investors, today’s UK jobs figures could also influence the pound.
What’s been happening?The pound exploded out of the gates this week, rocketing higher on the news that the UK and EU would go the ‘extra mile’ and extend trade negotiations past Sunday’s deadline.
Adding to the upbeat tone surrounding Sterling were hopes that this extra time could actually lead to a trade deal, with the EU’s chief negotiator, Michel Barnier, telling EU officials that a path to a potential agreement is ‘visible’.
The US dollar, meanwhile, was on the defensive on Monday, with investors shunning the safe-haven currency amidst an upbeat start to the week as Brexit optimism and renewed hopes for the next US stimulus package cheered the market mood.
This slump in the US dollar, alongside hopes for a Brexit deal helped to buoy the euro yesterday, although the single currency’s gains were tempered by concerns over new lockdown measures in Germany and the impact this could have on Eurozone GDP in the fourth quarter.
What’s coming up?Turning to today’s session, the pound may see a brief reprieve from Brexit this morning following the publication of the UK’s latest jobs report.
This could limit any upside in GBP exchange rates this morning after UK unemployment rose to a new four-year high in October.
In the absence of any notable EUR data releases today, we are likely to see movement in the euro remain mainly driven by market sentiment, with the single currency likely to extend its gains if the mood remains broadly positive.
Meanwhile, the US dollar could face some additional pressure later this afternoon, as the latest US industrial production figures are forecast to report that factory output slowed notably in November.
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)