The pound made some tentative gains yesterday amid cautious optimism surrounding Brexit as Theresa May met with EU leaders in an attempt to save her Brexit deal.
Sterling is showing resilience this morning however, with GBP/EUR steady at €1.1227, GBP/USD stable at $1.2726 and GBP/CAD strengthening to C$1.7062, while GBP/AUD and GBP/NZD climb to AU$1.7609 and NZ$1.8513 respectively.
A slew of US economic data will place the US dollar in focus today, with the currency potentially strengthening if US service sector growth remained as robust as expected last month.
What’s been happening?
The pound continued to be beset by volatility on Wednesday as markets reacted to the latest UK PMI figures and Brexit developments in Westminster.
In regards to the PMI figures, the data was seen as Sterling negative as it revealed growth in the UK’s service sector struck a 28-month low in November, while also coming dangerously close to stagnating.
However the pound was prevented from registering any losses yesterday as markets appeared to become increasing optimistic in regards to Brexit, with Tuesday’s setbacks for Theresa May actually seen as reducing the chances of a no-deal Brexit as MPs were given a greater say over the final deal.
The GBP/EUR exchange rate traded in a wide range yesterday, with some mixed Eurozone retail data limiting the appeal of the euro as a downwards revision to September’s sales growth undermined October’s acceleration.
Meanwhile the GBP/USD exchange rate closed Wednesday’s session virtually unchanged as a delay to yesterday’s US data releases left investors to focus on the recent decline in long-dated US bond yields and the possibility it may point to a downturn in US growth.
What’s coming up?
Looking to today’s session a deluge of US economic data is likely to keep investors busy, particularly with the release of the ISM non-manufacturing PMI.
Economists forecast the PMI will show that growth in the US service sector remained solid in November, likely helping to bolster the US dollar later this afternoon.
Meanwhile, Brexit is likely to remain the key concern for GBP investors today, with further volatility on the horizon as MPs continue to debate Theresa May’s Brexit deal.
Finally, the euro may trend higher this morning as data published at the start of the European session revealed a surprise rise in German factory orders in October.
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)