The pound stumbled to a new 14-month low against the US dollar yesterday as an underwhelming UK inflation report failed to offset the ongoing gains in USD as result of soaring safe-haven demand.
Sterling’s performance appears a little more mixed this morning however, with GBP/EUR rising to €1.1156, GBP/AUD climbing to AU$1.7480 and GBP/CAD holding steady at C$1.6730, while GBP/NZD edges down to NZ$1.9385 and GBP/USD plummets to $1.2860.
Whether the pound can continue its recovery will depend on today’s UK GDP figures, with an underwhelming result potentially propelling the currency to new lows…
What’s been happening?
The pound firmed on Thursday, with the currency finally finding some solid footing following some heavy losses in the first half of the week.
Analysts suggested the rebound in Sterling may be partiality attributed to a correction in the market following some overzealous selling earlier in the week, with the currency also being buoyed by optimism towards Friday’s GDP figures.
The GBP/EUR exchange rate made some solid progress toward recouping Wednesday’s losses yesterday, as the euro came under pressure in the wake of the European Central Bank’s (ECB) latest economic bulletin.
The bulletin was large consistent with the Bank’s message following its most recent policy meeting, with warnings about the impact of US tariffs on global growth and spooking EUR investors who fear that a global slowdown could put the Eurozone’s recovery in jeopardy.
Meanwhile, after treading water for much of the session, the GBP/USD exchange rate tumbled late on Thursday as ongoing trade concerns and rising geopolitical tensions saw investors flock to the US dollar.
These losses were then accelerated overnight, with the US dollar being propelled past a one-year high against the pound to strike its highest levels since July 2017.
What’s coming up?
Looking ahead, the pound may look to extend its rally this morning following the release of the UK’s latest GDP figures.
Economists are forecasting that after a slow start to the year the UK economy will be shown to have expanded by a healthy 0.4% in the second quarter, potentially lending support to Sterling.
The UK’s latest industrial production figures may give GBP an additional boost as analysts predict a rebound in factory output in June.
Meanwhile, the US dollar could accelerate this afternoon with the publication of the latest US CPI figures, with another lift in US inflation likely to bolster the case for the Federal Reserve to continue with its current pace of monetary tightening.
Finally the euro appears to have found little support from this morning’s French Industrial figures, with the single currency looking to be in for a rough day of trade if the US dollar accelerates as expected.
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)