The US dollar fell to two-week lows against its major rivals yesterday after concerns over the US economy’s resilience sapped USD demand.
Sterling is struggling again this morning with GBP/EUR edging down to €1.1145, GBP/USD is subdued at $1.2726 and GBP/CAD muted at C$1.6943, while GBP/AUD and GBP/NZD dip to AU$1.7633 and NZ$1.8477 respectively.
Coming up today will be the release of the UK’s latest GDP figures, but will this have any notable impact on GBP exchange rates given the focus on tomorrow’s Brexit vote?
What’s been happening?
The pound stumbled at the end of last week’s session, giving up some of Thursday’s gains as investors became increasingly wary of the UK currency ahead of this week’s Brexit vote.
Applying further pressure to the pound was also the release of Halifax’s latest house price index, which revealed UK house price growth slumped to a six-year low over the last year after a surprise contraction in average prices in November.
This saw the GBP/EUR exchange rate strike a two-month low on Friday as the Euro was also lifted by the news that Annegret Kramp-Karrenbauer will replace Angela Merkel as leader of Germany’s ruling CDU party, much to the relief of EUR investors who see her as ‘Merkel lite’.
Meanwhile while the GBP/USD exchange rate fell back on Friday, the US dollar didn’t fare quite so well against its other currency peers as a sharper-than-expected drop in US non-farm payrolls and slowing domestic wage growth weighed on the ‘greenback’.
What’s coming up?
Looking ahead, movement in the pound in the early part of this week looks set to be shaped by the parliamentary vote on Theresa May’s Brexit deal, with significant volatility expected in the event that MPs reject the deal.
However in the run up to Tuesday’s vote, the UK will also publish its latest GDP figures, with Sterling potentially weakening this morning if UK economic growth is shown to have stagnated again in October.
Meanwhile, the euro may continue to strengthen today, following the release of Germany’s latest trade figures earlier this morning, which revealed a rebound in exports in October.
Finally, the focus for USD investors this week is likely to be on the publication of November’s US CPI figures, with an expected dip in inflation potentially denting the US dollar.
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)