The euro roared higher during yesterday’s session as markets cheered the EU’s proposals for a €750bn coronavirus recovery fund.
Sterling appears to be consolidating its gains this morning, with GBP/EUR flat at €1.1226, GBP/USD stable at $1.2724 and GBP/CAD muted at C$1.6906, while GBP/AUD and GBP/NZD hold steady at AU$1.8305 and NZ$1.9330 respectively.
Coming up today we have the latest US CPI figures, with the US dollar likely to fall as an expected side in inflation increases the chances of the Federal Reserve lowering interest rates this year.
What’s been happening?
The pound firmed on Tuesday, with markets cheering the release of the UK’s latest employment figures as wage growth was reported to have risen faster than expected.
According to data published by the Office for National Statistics (ONS), wage growth in the UK accelerated from 3.3% to 3.4% in April, beating forecasts it would slow to 3.1%.
However slightly tempering the pound’s gains were concerns that employment growth is slowing, with analysts warning that the strength of the UK jobs market may be waning.
Helping to bolster the gains in the GBP/EUR exchange rate was the Eurozone’s latest investor confidence index, which dragged on the euro as sentiment plummeted in June on the back of rising global trade tensions and concerns over a slowdown in Germany.
Meanwhile, the uptick in the GBP/USD exchange rate yesterday was aided by a series of tweets by Donald Trump, with the US dollar coming under fire as the President launched another scathing attack on the Federal Reserve, blaming the bank’s high interest rates for undermining US competitiveness.
What’s coming up?
Centre stage today will be the release of the US CPI figures, with may drive the US dollar lower as an expected slide in inflation would further increase the odds that the Fed will need to lower interest rates by the year’s end.
Meanwhile, EUR investors will be focused on a speech by European Central Bank (ECB) President Mario Draghi scheduled for later today as they look for any signs that there may be some truth in recent reports that the bank is mulling over the possibility of lowering interest rates.
Finally, in the absence of any notable domestic data, the main catalyst for movement in the pound today is likely to be the Conservative leadership contest, with heightened political uncertainty in the UK potentially dragging on Sterling 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)