The euro slipped on Friday as consumer confidence in the eurozone in May stayed close to the 22-month low reached in March.
Sterling is holding steady at the start of this week however, with GBP/EUR muted at €1.1294, GBP/USD stable at $1.2862 and GBP/CAD flat at C$1.7076, while GBP/AUD and GBP/NZD both hold steady at AU$1.7939 and NZ$1.9095 respectively.
Brexit is likely to remain in the spotlight as Theresa May sets out her plans for how she will proceed with Brexit, potentially driving further volatility in the pound.
What’s been happening?
After soaring higher overnight on Thursday the pound fell back at the end of last week’s session as it was undermined by some disappointing UK retail sales figures.
According to data published by the Office for National Statistics (ONS), UK sales growth contracted sharply in December, falling from 1.3% to -0.9% and driving Sterling lower.
This was the steepest decline in sales since May 2017, with the ONS attributing the slide to shifting shopping habits, as consumers now focus their spending in November to take advantage of the Black Friday sales.
The sharpest losses in Sterling were seen against the US dollar, with the GBP/USD exchange rate slumping over half a cent as the ‘greenback’ started to gain momentum in the afternoon, despite US consumer confidence having fallen to a two-year low in January.
Meanwhile, the GBP/EUR exchange rate also fell back on Friday, although the pairing’s losses were trimmed somewhat as the euro faced broad pressure over mounting concerns of a slowdown in the Eurozone.
What’s coming up?
Looking ahead, Brexit is likely to be back in the spotlight at the start of this week’s session.
Theresa May will make a speech in Parliament later today to discuss the government’s next steps after markets rejected her Brexit deal last week; this could prompt some volatility in the pound depending on what is said.
Meanwhile, the euro may trade in a narrow range throughout the first half of this week’s session as markets await the European Central Bank’s (ECB) policy meeting later in the week.
Finally, the ongoing government shutdown looks set to continue to limit the release of US economic data this week, potentially capping movement in 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)